FOLLOW US

US stocks surged Friday as investors welcomed the December jobs report and services-sector data as signs the Federal Reserve could start slashing interest rates after dramatically tightening them to tame soaring inflation.

The Labor Department said average hourly earnings gained 0.3% last month, less than the 0.4% consensus estimate from a Bloomberg survey of economists. Headline hiring of 223,000, however, was above the 200,000 consensus estimate.

Meanwhile, the Institute for Supply Management's services-sector report showed prices paid decelerating while services activity shrank for the first time since May 2020.  

"Investors appear to be in the mood for seeing the best in any situation," said Chris Beauchamp, chief market analyst at online trading platform IG, in a note. The "general takeaway is weaker data will help to slow down the Fed earlier than expected, or perhaps bring forward the first cut in US rates."

Here's where US indexes stood at the 4:00 p.m. closing bell on Friday: 

•  S&P 500: 3,895.08, up 2.28%

• Dow Jones Industrial Average: 33,630.61, up 2.13% (700.53 points)

• Nasdaq Composite: 10,569.29, up 2.56%

The daily gains allowed the S&P 500 and the Nasdaq Composite to notch their first weekly advance after four weeks of losses.

Still, Beauchamp said, "US indices have rallied but have yet to break above recent resistance, suggesting this bounce has yet to really develop the necessary strength for a real rally."