US open: Dow opens 550 points higher on solid jobs report and news of trade talks with China
Wall Street trading began on a positive note at the open on Friday, as investors welcomed signs of progress in Sino-US trade talks and a very solid non-farm payrolls report covering the month of December.
At 1520 GMT, the Dow Jones Industrial Average was 1.99% higher at 23,138.61, while the S&P 500 picked up 2.02% to 2,497.22 and the Nasdaq traded 2.25% firmer at 6,609.04.
The Dow opened as much as 450 points higher after Washington and Beijing announced that they will hold vice-ministerial level negotiations over trade in the Chinese capital early next week.
The talks will mark the first face-to-face meeting since Donald Trump and Xi Jinping met at the G-20 meeting in December and agreed to a temporary truce on tariffs.
Oanda analyst Craig Erlam said the talks will hopefully lead to fewer rather than more tariffs and reduce a major headwind for the global economy.
"Trump has previously claimed that the talks are progressing well, although that may have been said with one eye on the spiralling stock market rather than be a reflection of genuine progress.
"It is encouraging that there is real appetite to work towards a solution on both sides though, although whether that will be enough to get a comprehensive agreement over the line is another thing."
Also underpinning sentiment was data showing that China's services sector had expanded at a slightly faster pace in December. The Caixin China services purchasing managers' index ticked up to 53.9 in December from a reading of 53.8 for November, beating expectations for a reading of 52.9.
Elsewhere, the People's Bank of China said it would be cutting the required reserve ratio for banks by 0.5 percentage points on 15 January, with a further 0.5 percentage point cut to come on 25 January. China’s central bank said the cut will release a net 800bn yuan ($116bn) of liquidity.
In currency news, the USD gained 0.06% against the GBP to 0.7922.
On the macro calendar, hiring in the USA shot higher at the end of 2018 driven by sharp gains on both the goods and services side of the economy, even as wage growth quickened, enticing more Americans to re-enter the work force.
According to the Department of Labor, US non-farm payrolls increased by 312,000 in December, while the rate of growth in average hourly earnings picked-up to 3.2%.
That dwarfed consensus forecasts calling for increases of 184,000 and 3.0%, respectively.
The rate of unemployment however also increased unexpectedly, by two tenths of a percentage point versus the prior month to reach 3.9% (consensus: 3.7%), as the labour force participation rate climbed from 62.9% to 63.1%.
As a result, the Labor Department revised its estimates of non-farm payroll growth for the preceding two months higher by 38,000.
On the corporate front, Canada Goose gained 7.02% at the open after opening its new flagship store in Beijing and Spirit Airlines took off 3.14% after refuting claims that passengers were falling ill after consuming water from Cleveland Hopkins airport.
Netflix picked up 4.73% in early trade after Goldman Sachs tapped it as one of its favourite stocks and Etsy shot up 7.44% after being raised to 'buy' by the same broker.
Lastly, oil prices headed towards their fifth straight advance in early trade as West Texas Intermediate gained 2.44% to $48.24 a barrel and Brent Crude picked up 2.73% to $57.48.