Dow surges nearly 400 points at peak Nasdaq marks 1st intraday record in 6 weeks

U.S. stock benchmarks rallied Friday afternoon as Wall Street appeared to shake off worries about tariffs on steel and aluminum to focus a jobs report for February that came in hotter than had been estimated, as the report signaled a muted rise to wage growth for the month, helping to ease worries about runaway inflation.

The U.S. created 313,000 new jobs in February, the biggest gain since mid-2016 and a reflection of the strongest labor market in two decades. Economists polled by MarketWatch had predicted a 222,000 increase in nonfarm jobs. The unemployment rate was unchanged at 4.1%. Hourly pay rose 4 cents, or 0.1%, to $26.75 an hour, the government said Friday. Economists polled by MarketWatch had been expecting average hourly earnings to have risen 0.2%, after a 0.3% gain in January, with an overall jobs gain of 220,000.

What are the main benchmarks doing?

The Dow Jones Industrial Average DJIA, +1.49% rose 374 points to 25,271, a rise of 1.5%. Meanwhile, S&P 500 index SPX, +1.41% climbed 39 points, or 1.4%, to 2,777, with financials shares surging by 2%, while technology stocks were up by about 1.6%.

The Nasdaq Composite Index COMP, +1.43% added 106 points, or 1.4%, to 7,534, trading at a record--the index hasn’t closed at a record, or set an intraday mark, since Jan. 26.

On Thursday, the S&P 500 index added 0.5%, while the Dow industrials and Nasdaq added 0.4% each. The gains came as the markets took positively the news that Trump signed a steel and aluminum tariff proclamation, but allowed for some exemptions.

For the week, the S&P 500 is looking at a gain of 3.2%, the Dow is poised to rise 3%, while the Nasdaq is set to rise 3.8%.

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What could drive the markets?

Investors had been apprehensive after January’s upbeat jobs report was blamed for a meltdown for stocks last month. Investors are wary of indications that the U.S. labor market is tightening up, but the wage figures appeared to be more muted than January’s report, market participants said.

Rapidly rising inflation could also add pressure on the Federal Reserve to speed up its rate rises, which could strangle the stock market.

Data released earlier in the week showed private-sector employers added a stronger-than-expected 235,000 jobs.

Markets appeared to largely dismiss news that President Trump has accepted an invitation to meet North Korea’s leader. The meeting could be held as early as May, according to a senior South Korean official who made the announcement at the White House on Thursday evening. But the news did give Korean stocks a boost.

Read:How the Trump-Kim meeting news moved markets

Investors were also still taking in reaction to Trump’s tariff announcement, which weighed on Korean steelmakers in Asia.

What are strategists saying?

“You’re getting strong jobs with not a lot of wage growth, which is perfect below expectations. And that’s what’s sort of powering the futures right. It’s the best of both worlds,” said Robert Pavlik, chief investment strategist at SlateStone Wealth.

“If you had tried to concoct an event that would be good news for the economy and good for the markets, you would come up with the kind of jobs report that we got today: solid headlight number with only moderate wage growth,” said Kristina Hooper, chief global market strategist at Invesco.

“For a labour market that we are told is rather tight this is quite a big number and the fact that we saw wage growth slow to 2.6% from 2.9% would suggest that there is much more slack in this particular jobs market than most people think,” wrote Michael Hewson, chief market analyst, at CMC Markets UK, in a Friday note.

“This would suggest that those calls for four rate rises this year may well be a little bit premature, particularly when you see the participation rate jump from 62.7% to 63%, as more people return to the workforce,” Hewson said.

Fed speakers and data

“I think we really have the ability to be cautious,” said Federal Reserve President of Chicago Charles Evans during a CNBC interview on Friday after the jobs report, referring to the Fed’s plan for coming rate increases. Evans isn’t presently a voting member of the Federal Open Market Committee.

The market volatility seen over the past month is a “healthy realization” by investors that the risks are two-sided, said Boston Fed President Eric Rosengren on Friday, at the Springfield Regional Chamber of Commerce in Springfield, Mass.

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Meanwhile, wholesale inventories rose by 0.8% in January, up from 0.4% before.

Which stocks are in focus?

Dana Inc.DAN, +3.63% shares were up 3.9% after announcing a deal to combine with GKN PLC’sGKN, +3.25% Driveline unit in a deal valued at around $6.1 billion, including debt. Shares of GKN were up 3.3%. SXXP, +0.43%

Big Lots Inc.BIG, -10.20% shares slid 11% after fourth-quarter results.

Goldman Sachs Group Inc.shares were up 1.4% amid a report from The Wall Street Journal report that hinted that CEO Lloyd Blankfein is set to retire by as early as the end of 2018.