WASHINGTON (dpa-AFX) - After opening on a slightly cautious note, U.S. stocks turned in a fine performance on Friday, and the major averages all ended with strong gains.
The Dow ended with a gain of 700.53 points or 2.13 percent at 33,630.61. The S&P 500 surged 86.98 points or 2.28 percent at 3,895.08, while the Nasdaq climbed 264.05 points or 2.56 percent to 10,569.29.
Stocks rallied as investors hoped that the report from the Institute for Supply Management showing U.S. service sector activity unexpectedly contracted in the month of December will convince the Federal Reserve to continue to slow their aggressive pace on interest rate hikes.
The ISM said its services PMI tumbled to 49.6 in December from 56.5 in November, with a reading below 50 indicating a contraction. Economists had expected the index to edge down to 55.0.
With the much bigger than expected decrease, the index indicated a contraction for the first time since May 2020, when it hit 45.2.
Data from the Labor Department showed employment in the U.S. increased by slightly more than expected in the month of December.
The report said non-farm payroll employment jumped by 223,000 jobs in December after surging by a revised 256,000 jobs in November.
Economists had expected employment to shoot up by 200,000 jobs compared to the addition of 263,000 jobs originally reported for the previous month.
The Labor Department also said the unemployment rate edged down to 3.5 percent in December from a revised 3.6 percent in November.
The unemployment rate was expected to come in unchanged compared to the 3.7 percent originally reported for the previous month.
Intel rallied more than 4 percent. Walgreens Boots Alliance, Boeing, Caterpillar, Travelers Companies, Apple, Cisco Systems, Amgen, Nike, Visa and Honeywell International gained 3 to 4 percent.
American Express, Coca-Cola, P&G, JP Morgan, IBM, Verizon, Microsoft and Goldman Sachs also posted strong gains.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index climbed by 0.6 percent, while China's Shanghai Composite Index inched up by 0.1 percent.
The major European markets also moved to the upside on the day after U.S. jobs and service sector data. Data showing a drop in Eurozone consumer price inflation, and an improvement in eurozone economic confidence contributed as well to the positive mood in the European markets.
The pan European Stoxx 600 gained 1.16 percent. The U.K.'s FTSE 100 climbed 0.87 percent, Germany's DAX advanced 1.2 percent, and France's CAC 40 ended stronger by 1.47 percent.
In the bond market, treasuries moved sharply higher following the weaker than expected service sector reading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dropped 12.9 basis points at 3.591 percent.
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