US open: Stocks rally as non-farm payrolls pave way for Fed rate hike in December

US equities jumped early on Friday, after a stronger-than-expected non-farm payrolls report all but guaranteed the Federal Reserve will raise interest rates later this month.

Shortly before 1500 GMT, the Dow Jones Industrial Average was up 118 points to 17,595.19, while the S&P 500 and the Nasdaq were respectively 16 and 41 points higher.

Non-farm payrolls pave way to December rate hike

According to the Labor Department, non-farm payrolls in November rose by 211,000 compared with October’s upwardly revised 298,000 gain and with analysts’ expectations for a 200,000 reading.

The unemployment rate was unchanged at 5%, as analysts had forecast, while the labour-force participation rate rose to 62.5%.

“The ‘data dependent’ Fed will be reassured that the economy is showing no sign of succumbing to worries about the global outlook, as had been feared recently, and that domestic demand is strong enough to withstand an initial hike in interest rates from what were seen as emergency record-low levels some six years ago,” said Markit’s chief economist Chris Williamson.

“A December rate hike now looks to be in the bag.”

Meanwhile, average hourly wages increased 0.2% month-on-month in November, in line with consensus but slightly below the 0.4% gain registered in October.

Still to come, Philadelphia Fed president Patrick Harker is set to speak at a Philadelphia Fed conference at 1515 GMT, while St Louis Fed president James Bullard and Minneapolis Fed president Narayana Kocherlakota will speak at the same event at 2045 GMT and 2110 GMT respectively.

In company news, Avon Products jumped 12.3% after sources cited by the Wall Street Journal suggested the group was edging closer to a deal with private-equity firm Cerberus Capital Management.

Medical devices group Cooper Companies tumbled 10.6% after analysts at JP Morgan downgraded the stock to ‘neutral’ from ‘overweight’ and cut their target price from $175 to $145.

Media retailer Barnes & Noble plunged 20.6% after its second quarter results missed expectations late on Thursday.

Elsewhere, Asian stocks ended the week on a downbeat note, as investors were left disappointed by the latest round of stimulus measures introduced by the European Central Bank, while European equities headed for their worst week in over three months on the back of the ECB decision.

The dollar fell 0.15% against the euro but gained 0.23% against the yen and was broadly flat against the pound, while gold spot jumped 1.11% to $1,073.89

Oil prices sank after OPEC agreed to hike its production ceiling to 31.5m barrels per day. West Texas Intermediate fell 2.67% to $40.01 a barrel, while Brent slid 1.71% to $43.10 a barrel.