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Stocks Rise On China, Jobs Data, Dow Stock Upgrade

Stocks bolted out of the starting gate Friday on positive news from China and stronger-than-expected December payrolls data, and ahead of comments from the Federal Reserve chairman Jerome Powell.




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Chip stocks rallied at the open, as Dow Jones stock Intel (INTC) surged early on an analyst upgrade and price hike. Netflix (NFLX) staked out a big lead among rebounding FANG stocks. Alibaba Group Holding (BABA) and IPO Tencent Music (TME) led an early surge among China-based names.

The Nasdaq Composite was up 2.4% and climbing, as NetEase (NTES), Electronc Arts (EA) and Celgene (CELG) led the Nasdaq 100.

The Dow Jones industrial average and S&P 500 each strengthened their opening gains to 2%. Intel easily topped the Dow. Varian Medical (VAR), CF Industries (CF) and Electronic Arts jockeyed for the top slot among S&P 500 stocks.

Payrolls Data: December Hiring, Wage Gains Soar

The Labor Department reported 312,000 workers hired in December, up more than 77% from November’s 172,000 new hires, and far above forecasts for 180,000 new jobs. Hourly wages increased 3.2%, above expectations and the biggest increase since 2009. The unemployment rate also jumped, to 3.9% from 3.7%, as 839,000 workers voluntarily left their jobs during the month and began looking for other work.

The dollar surged and bonds dived, sending the 10-year yield up 7 basis points, to 2.62%.

Federal Reserve Chairman Jerome Powell is scheduled to participate in a panel discussion with former Fed chiefs Janet Yellen and Ben Bernanke in Atlanta at 10:15 a.m. ET.

Government Shutdown: Day 13

Maneuvering was underway in Washington, where the new Democratic leadership in the House passed a bill that would re-open government offices and fund Homeland Security operations for 30 days, while denying the $5 billion in border-wall funding demanded by the president. The bill, which Trump has pledged to veto if it does manage to pass the Senate, serves mainly to establish party-line postures. The shutdown of federal offices that has idled an estimated 800,000 workers is now in its 13th day.

Dow Jones, Nasdaq: Rally Attempt Vs. Bear Market

A tough day of trading Thursday left the Dow Jones industrial average down 660 points, a stark reminder that the stock market remains in a correction, but is attempting to break that status with a rally attempt that began Dec. 26. Investors should be watching for a valid follow-through day, which would launch a new, confirmed uptrend.

The rally attempt remains in force so long as the major indexes do not undercut the correction’s prior lows. At the end of Thursday’s session, the Dow Jones industrial average was 4.3% above and the S&P 500 was 4.2% off their Dec. 26 lows. The Nasdaq ended Thursday 4.2% from its Dec. 24 low. Friday’s gain lifted the Nasdaq to less than 20% from a recent high, and technically out of bear market status.

Global Markets: Europe Picks Up China Rally

Stock market benchmarks in Hong Kong and Shanghai jumped more than 2% after positive services sector data, fiscal support from the central bank and as the country confirmed trade talks would begin Monday with the U.S. Japan opened from a week-long shutdown with Tokyo’s Nikkei 225 playing catch up to losses in the U.S. and diving 2.3%.

Europe’s stock market benchmarks picked up on the positive mood, both in China and the U.S., and traded sharply higher near midday. London’s FTSE 100 and the CAC-40 in Paris were up 1.2% apiece. Frankfurt’s DAX surged 1.6%.

Oil Prices: Set To Snap Losing Streak

Oil prices are on track toward powerful weekly gains, as production caps agreed to by Russia and the Organization of Petroleum Exporting Countries kicked in Jan. 1. Europe’s Brent crude traded up 2.5% on Friday, tracking toward a gain of more than 9% for the week — snapping a three-week decline with its best week since December 2016. West Texas Intermediate rose 2.4% early Friday, scrambling back above $48 a barrel and putting it ahead more than 6% for the week. WTI is also set to snap a three-week decline.

Stocks: Intel, Tencent Music, Netflix

Intel opened ahead 3.5% after Bank of America hiked the stock to buy, from neutral. The report called Intel a compelling large-cap name “levered to multiple secular advances — cloud, artificial intelligence, 5G, autonomous cars.” The note also lifted Intel’s price target to 60, from 52. The IBD 50 stock ended Thursday 23% below a June high, below both its 10- and 40-week moving averages in a possible long-term base pattern.

Tencent Music powered up1.9%, leading a list of China-based IPOs jumping in early trade. The Spotify-like streaming music service is trading below its mid-December IPO price, but working on a possible base.

Netflix climbed more than 4% ahead of the open and is tracking toward its first two-week advance since August. The FANG stock is a steep 36% below its June peak. But put it back above its 10-week moving average, which had acted as  line of resistance since October.

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