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U.S. stocks closed higher on Friday in volatile trade to snap a four-session losing streak as investors wrestled with a mixed jobs report and comments from Federal Reserve officials on the pace of interest rate hikes. The Canadian stock market largely followed in its path, as investors here also took in a surprisingly strong domestic employment report that helped send the loonie to its biggest gain against the greenback in 12 years.

The S&P 500 and the Nasdaq each rose as much as 2% in the early stages of trading while the Dow Jones Industrial Average climbed as much as 1.9% on the heels of the closely watched labor market report, before paring gains and briefly falling into negative territory. The report showed an uptick in the unemployment rate in October, indicating some signs of slack may finally be starting to emerge in the job market and give the Fed room to downsize its rate hikes beginning in December.

But the data also showed average hourly earnings rose slightly more than expected, as did job growth, pointing to a labor market that largely remains on firm footing.

Labour market data has been a primary focus for markets as the Fed has repeatedly stated it is looking for some cooling before considering a pause in hikes. Hawkish comments from Fed Chair Jerome Powell on Wednesday increased worries the central bank could keep boosting interest rates for longer than previously expected and put further pressure on stocks.

“This was not a report that shows the rate hikes are starting to take hold,” said Shawn Cruz, head trading strategist at TD Ameritrade in Chicago. “You could maybe justify some of this move as this selling got a little overdone after what Powell said at the meeting, so maybe you already had the sellers flushed out.”

On Friday, Fed officials echoed Powell’s comments about potentially decreasing the size of rate hikes in the future, but needing to continue to raise rates for a longer period of time and potentially above the 4.6% level the central bank penciled in at its September meeting.

Equities got a boost late in the session after Chicago Fed President Charles Evans said it was possible for the Fed to be “thinking” about pausing even if it’s a year from now.

The Dow Jones Industrial Average rose 401.97 points, or 1.26%, to 32,403.22, the S&P 500 gained 50.66 points, or 1.36%, to 3,770.55 and the Nasdaq Composite added 132.31 points, or 1.28%, to 10,475.25.

For the week, the Dow fell 1.39% to snap a four-week winning streak, the S&P dropped 3.34% and the Nasdaq slid 5.65% for its biggest weekly percentage decline since January.

The non-farm payrolls report comes after a conflicting set of data this week that pointed to a slowdown in certain parts of the economy but also underscored the resilience of the U.S. labor market despite aggressive rate hikes to tame inflation.

Traders’ expectations of a 75 basis point rate hike in December had briefly jumped after the jobs report but were now pricing in about a 62% chance of a 50 basis point hike, according to CME’s FedWatch Tool.

Market focus will now turn to a key consumer inflation reading due next week as well as the U.S. midterm elections on Nov. 8, where control of Congress is at stake.

Meanwhile, hopes of an easing in China’s tough COVID-19 curbs supported some areas of the market, with U.S.-listed shares of Chinese companies including Alibaba, which finished up 7.05% and, up 9.74%.

Those hopes also helped boost prices of commodities such as copper, which in turn lifted the materials sector 3.41% as the best performing of the 11 major S&P sectors.

Starbucks Corp jumped 8.48% after it topped Wall Street estimates for quarterly comparable sales and profit, while DoorDash Inc’s revenue beat boosted the food delivery firm’s shares by 8.32%.

Canada’s main stock index clawing back almost all of its weekly decline, after robust domestic jobs data and as commodity prices jumped.

The Toronto Stock Exchange’s S&P/TSX composite index ended up 208.59 points, or 1.1%, at 19,449.81. For the week, it was down 0.1%.

The Toronto market’s materials sector, which includes precious and base metal miners, led gains, climbing 5.9% as gold and copper prices rose.

China, a major consumer of commodities, will make substantial changes to its “dynamic-zero” COVID-19 policy in coming months, a former Chinese disease control official told a conference hosted by Citi.

Among the major gainers was, Yamana Gold Inc. Its shares surged 18.1% after the company received an unsolicited near $5 billion takeover offer from Agnico Eagle Mines Ltd and Pan American Silver Corp.

Shares of Enbridge Inc gained 1% after the company announced an expansion of the southern segment of its British Columbia pipeline system.

Heavily-weighted financials rose 1.9% but technology was a drag, ending 4.1% lower.

In currency markets, the Canadian dollar soared as oil prices jumped and domestic jobs data bolstered bets for another larger than normal interest rate hike by the Bank of Canada next month.

The Canadian economy added 108,300 jobs in October, easily beating forecasts for 10,000 new jobs, with the blowout gain entirely in full-time work.

Money markets see a 65% chance that the BoC would raise its benchmark interest rate by half a percentage point at its next policy announcement on Dec. 7, up from about 50% before the data.

The U.S. dollar tumbled against a basket of major currencies, which also lent support to the loonie.

U.S. crude prices settled 5% higher at $92.61 a barrel, while the Canadian dollar rose 2% to 1.3475 per greenback, or 74.21 U.S. cents, its biggest advance since May 2010.

The currency touched its strongest intraday level since Sept. 23 at 1.3470. For the week, it was up 0.9%.

Canadian government bond yields rose across the curve. The 10-year touched its highest since Oct. 25 at 3.549% before pulling back to 3.520%, up 10.6 basis points on the day.

Reuters, Globe staff

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