The job market is still robust. China took action to stimulate its slowing economy. And Federal Reserve Chairman Jerome Powell said the Fed will be flexible in its plan to hike interest rates. All three of those events addressed issues that investors have been particularly concerned about over the past several months.
The Dow soared 747 points, or 3.3% — its fourth-biggest point increase of all time. The Dow has now surged 1,641 points, or 8%, since Christmas Eve.
The S&P 500 rose 3.4% and Nasdaq was up 4.3%.
“I thought stock market concerns about growth were overblown,” said Gus Faucher, chief economist at PNC. “This proves I was correct.”
A sigh of relief
“Investors are breathing a sigh of relief right now,” Sam Stovall, chief investment strategist at CFRA Research, told CNN.
The central bank indicated at last month’s meeting that the economy likely warranted two rate increases in 2019.
“We will be patient as we watch to see how the economy evolves,” Powell said.
Strong jobs market
Employers added 312,000 jobs in December, well more than economists had forecast. Friday’s jobs report was the biggest surprise of the economic cycle, according to Goldman Sachs
The unemployment rate rose to 3.9% because many people reentered the workforce. And paychecks grew a better-than-expected 3.2% from a year ago as employers raised wages to attract new workers. Average hourly pay was up 3.2% compared to a year earlier. The average number of hours people worked also edged up.
“It seems to be a pretty good indication that the economy isn’t anywhere close to recession, at least for now,” said Brian Rose, chief Americas economist at UBS Asset Management.
China’s slowing economy has been a prime factor in the extreme market volatility of the past several months.
Analysts at Macquarie Capital said that the rate cut shows government efforts to support the economy have now moved to the “second level” and should signal to investors that more stimulus is in the pipeline.
Roller coaster ride
The up and down market continues.
CNN’s Matt Egan contributed to this report.