U.S. stocks rallied, with the Standard & Poor's 500 Index recovering from its steepest drop in two months amid its strongest gain in nearly three, as jobs data bolstered confidence that the economy is strong enough to withstand higher borrowing costs.
Technology and financial shares paced Friday's advance, with Apple Inc., Microsoft Corp. and JPMorgan Chase & Co. all rising more than 3 per cent, to cap a whipsaw week of trading that drove the benchmark index to moves of more than 1 per cent in four straight sessions.
The Standard & Poor's 500 Index climbed 2 per cent to 2,091.31 in New York, its strongest gain since Sept. 8. The gauge posted its ninth weekly advance in the last 10.
The Dow Jones industrial average rose 369.96 points, or 2.12 per cent, to 17,847.63, while the Nasdaq Composite added 104.74 points, or 2.08 per cent, to 5,142.27.
"This number plus last month's report really wipes out the stench from the miss we saw in August and September," Phil Orlando, who helps oversee $360-billion as chief equity-market strategist at Federated Investors Inc. in New York., said. "This number ought to clinch it for the Fed in terms of liftoff in December. We should have a spike after yesterday's overreaction on the euro and Draghi."
Stocks extended gains in afternoon trading after European Central Bank President Mario Draghi said the bank has the power to act to the extent it sees necessary to defend its inflation mandate, and is willing to use it. His comments came a day after the ECB unveiled stimulus measures that disappointed investors, sparking a sell-off in Europe that spread to the U.S.
Friday's rally began after a report showed a larger-than-forecast 211,000 increase in November U.S. payrolls, following a 298,000 gain a month earlier that was bigger than previously estimated. The jobless rate held at 5 per cent, a more than seven-year low.
A healthy rate of hiring has raised the odds that Federal Reserve officials will boost rates this month for the first time since 2006. The pace of future increases is contingent on progress toward the central bank's inflation goal and probably depends on how quickly wage pressures mount as the job market tightens.
Friday's report was the last major jobs data before the Fed's December policy meeting. In two separate speeches this week, Fed Chair Janet Yellen signalled the economy is ready for a rate increase as soon as this month and that she hopes to tighten monetary policy slowly. Traders are pricing in 76-per-cent odds of a liftoff.
Philadelphia Fed President Patrick Harker said the central bank should raise interest rates "sooner rather than later" to allow a gradual pace of future increases, in his first public comments on monetary policy since taking office.
"The data implies an improving U.S. economy, which should provide a backdrop for the Fed to raise rates at their upcoming meeting," said Michael James, managing director of equity trading at Wedbush Securities Inc. in Los Angeles. "You'll see the market react positively to this data. Expect to see strong performance from financial stocks today, as they'll be the beneficiaries of a potential rate hike."
OPEC signalled no respite from the global oil glut that has driven prices to a six-year low.
The Organization of Petroleum Exporting Countries will keep pumping about 31.5 million barrels a day, the group's President Emmanuel Ibe Kachikwu said Friday after a meeting of ministers in Vienna. Members set aside their previous daily output target of 30 million barrels, a ceiling breached for 18 months. OPEC will wait until June to decide on a new limit, Secretary General Abdalla El-Badri said.
"Why should OPEC alone sacrifice its part in the market," Iraq's Oil Minister Adel Abdul Mahdi told reporters after the meeting. "Americans don't have any ceiling, Russians don't have any ceiling, why should OPEC have a ceiling?"
Guided by its biggest producer Saudi Arabia, OPEC has increased output in an oversupplied market in a bid to force higher-cost producers to scale back their operations. A proposal Thursday from Venezuela for a 5-per-cent cut in the group's production went nowhere as Iran joined the ranks of members refusing to accept any curbs.
"The volume-maximizing strategy goes on for OPEC," said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. "It's at least better to give up a useless ceiling. The burden to adjust supply remains on non-OPEC producers."
Crude slumped about 38 per cent in the last year, with global benchmark Brent crude headed for its lowest annual average in a decade after reaching a six-year low of $42.23 on Aug. 24. Brent fell 1.9 per cent to $43 a barrel Friday, while West Texas Intermediate crude dropped 2.7 per cent to $39.97.
TSX
Canadian stocks fluctuated before finishing higher on Friday after a two-day slide, as a slump in energy shares was offset by a rally in miners.
Energy companies fell 2.3 per cent after a surprise move by major oil exporters to keep pumping near-record volumes pushed crude prices down. Meanwhile, raw-material producers rose 3 per cent as metals prices rebounded.
The Standard & Poor's/TSX Composite Index added 34.10 points, or 0.26 per cent, to 13,358.77 in Toronto.
A Canadian labour market report Friday showed employment fell more than economists forecast in November. Jobs dropped by 35,700 following a gain of 44,400 in October. That compares to a projected decrease of 10,000 jobs, according to economists surveyed by Bloomberg. The unemployment rate rose to 7.1 per cent, Statistics Canada said Friday in Ottawa.
Energy companies, which account for more than 18 per cent of the nation's benchmark index, have slumped 25 per cent this year.
Suncor Energy Inc declined 2 per cent and Canadian Natural Resources Ltd declined 0.4 per cent.
Along with energy stocks, industrial companies also declined Friday. The group fell 1.4 per cent, weighed down by railway companies.
Canadian Pacific Railway Ltd. declined 4.1 per cent. Norfolk Southern Corp. rejected Canadian Pacific's $29-billion takeover, saying that even at a sweetened price, a deal would be unlikely to gain regulatory approval.
Metals prices are recovering after the dollar weakened the most in almost nine months on Thursday. Silver Standard Resources Inc. gained 5.7 per cent and Agnico Eagle Mines Ltd. rose 8.3 per cent.
Gold miners moved higher, with Barrick Gold Corp advancing 7.1 per cent and Goldcorp Inc up 5.8 per cent.
With files from Reuters