US stocks rose on Friday, reversing losses in premarket trading after the Labor Department estimated that the US economy added 136,000 jobs in August, enough to allow unemployment to fall to a 50-year low of 3.5%, but not to discourage the Federal Reserve from further cutting interest rates this year.
Investors await a speech from Federal Reserve leader Jerome Powell later Friday.
How do benchmarks perform?
Dow Jones Industrial Average
DJIA, + 0.91%
rose 237 points, or 0.9%, to 26,439, the S&P 500 index
SPX, + 0.92%
added 28 points, or 1% to 2,938, while Nasdaq Composite
COMP, + 0.93%
advanced 78 points, or 1%, to 7,949.
On Thursday, Dow closed 122.42 points, or 0.47%, on 26.201.04 while the S&P 500 index rose 23.02 points, or 0.8%, to 2,910.63, and the Nasdaq Composite Index rose 87.02 points to 7,872.26, a gain of 1.12%.
For the week, the Dow is on pace for a 1.5% decline so far, the S&P 500 is set to drop 1.3%, but the Nasdaq is set for a weekly increase of 0.1%. The Russell 2000 Index
RUT, + 0.24% ,
who sustained a bearish "cross of death" on Thursday were on the verge of shedding 2.1%.
What is it that drives the stock market?
The 136,000 new jobs created in September in the United States were just under 150,000 projections from economists surveyed by MarketWatch, but job and growth revisions in July and August showed that the U.S. economy added 38,000 more jobs in those months than previously thought. The average job growth of 157,000 over the past three months is enough to keep unemployment down, although it illustrates a steady decline in job growth in the US labor market.
"This is the classic definition of a Goldilocks report," Michael Arone, chief investment strategist at State Street Global Advisors told MarketWatch. "Job growth is slowing down, but the job market continues to be a strength in the US economy."
Average hourly earnings for workers fell 1 percent to $ 28.09, after rising 11 cents in August. Annual wage growth fell to 2.9% from 3.2% in August.
"The one concern is that the average hourly wage was going down a little," Arone said. "Some might take this as a positive because wages are not rising enough to flow into inflation, and it will allow the Fed to cut interest rates again."
Investors put a slightly lower chance that the Fed will cut interest rates at its next meeting that ends October 30, and futures markets with Fed fund prices price an 80.7% chance of a cut later this month, down from about 90% before the report was released. However, the market still puts more than a 91% chance of cuts by the end of 2019.
The job data is particularly significant after reports of US factory activity show evidence of contraction in September, with the Institute for Supply Management's production report on Tuesday showing the weakest reading in about a decade and an ISM non-producer report on Thursday, coming in at 52.6% – the weakest level in about three years.
Federal Reserve Deputy Richard Clarida late Thursday dropped the chance of a short-term recession. He said the risk is still low "with appropriate monetary policy" while speaking on a question-and-answer sponsored by the Wall Street Journal.
Clarida offered no explicit preview of whether the Fed would cut rates again at its October 29-30 meeting.
Investors were also watching the trade front, and stocks increased their gains late Friday morning after President Trump told reporters at the White House that there was "a very good chance" that a deal could be reached between the United States and China. The two sides will meet for high-level talks in Washington October 10-11.
A parade of other Fed speakers is also in focus, overwritten by a 5 p.m. a talk from Fed leader Powell, where he will make opening remarks about employment and price stability at a Fed-arranged event.
Before Boston Fed President Eric Rosengren spoke at 8:30 a.m. at an event in his home region, Atlanta Fed chief Raphael Bostic commented at 10:25 a.m. in New Orleans, Minneapolis Fed President Neel Kashkari will speak at 12 noon: 45 at an event in his district. Closing Friday's performances is Fed Gov. Lael Brainard, who will moderate a panel at 2:10 p.m., and Fed Deputy Supervisor Randal Quarles, who moderates a panel at 4 p.m.
How do other markets trade?  Shares of Apple Inc .
AAPL, + 2.20%
rose following a report in the Nikkei Asian Review that the company has asked suppliers to increase production of its latest iPhone 11 model by 10%, or 8 million units.  Costco Wholesale Corp .
COST, + 0.54%
reported tax revenue in the fourth quarter after close Thursday, with revenue and revenue falling below Wall Street estimates, although same-store sales growth of 5.1% matched with expectations.
How do other markets trade?
Return on the 10-year US Treasury
dropped about one basis point to 1.522%.
Gold prices dipped after falling higher Thursday. Gold for December delivery
fell $ 3.90 to $ 1,510.10 ounce on Comex.
West Texas intermediate crude for delivery in November
rose 44 cents, to $ 52.90 barrel on the New York Mercantile Exchange.
In Asia night through Wednesday, Hong Kong's Hang Seng
was down 1.1% when Hong Kong leader Carrie Lam banned protesters from wearing masks in a cure of the government's stance on the region's most disruptive crisis since returning to Chinese government in 1997. The mask ban goes into effect Saturday.
Meanwhile Japanese Nikkei 225
NIK, + 0.32%
meanwhile, gained 0.3% after a 2% fall on Thursday. European stocks were largely higher, with Stoxx Europe 600
SXXP, + 0.73%