Brexit breakthrough boosts European stock markets, pound

U.S. stocks rose on Friday, with both the Dow and the S&P 500 ending at records after the November jobs report came in much stronger than expected, underlining the economy’s strong fundamentals.

Both the Dow and the S&P also closed out their third straight weekly advance, though the Nasdaq ended in slightly lower on the week.

What are indexes doing?

The Dow Jones Industrial Average DJIA, +0.49% rose 117.68 points, or 0.5%, to 24,329.16. The S&P 500 SPX, +0.55% added 0.6% to 2,651.50, a gain of 14.52 points. The Nasdaq Composite Index COMP, +0.40%  rose 27.24 points, or 0.4%, to 6,840.08. The finish left the Nasdaq about 1 percentage point from its own record close.

The gains lifted the Dow and S&P into positive territory for the week. The Dow rose 0.4% for the week while the S&P rose 0.35%. The Nasdaq slipped 0.1% for the week, its second straight weekly decline.
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The day’s gains were broad, with 10 of the 11 primary S&P 500 sectors ending higher on the day, while the only decliner—materials—ended down by less than 0.1%. Health-care stocks were among the biggest gainers, closing 1.1% higher. Energy shares rose 0.9% alongside a 1.3% rise in the price of crude oil.

What’s drove the market?

The U.S. created 228,000 jobs in November, surpassing the 200,000 that had been expected, according to the nonfarm payroll report. The unemployment rate held at 4.1% while wages rose 0.2%. The report was the latest indication that the economy is running at full tilt, which could lead to the Fed being more aggressive in changing its monetary policy.

Investors on Friday also welcomed news that both the Senate and House late Thursday approved a two-week funding bill, staving off a threatened government shutdown this weekend. The bill now moves to President Donald Trump to sign, which he is expected to do on Friday. The bill buys Trump and congressional leaders a little more time to hammer out a longer-term deal.

Read: Here’s how the stock market has handled past government shutdowns

In Europe, investors cheered a breakthrough in Brexit talks between the U.K. and European Union. After days of tense negotiations, Jean-Claude Juncker, president of the European Commission, said early Friday that “sufficient progress” has been made for talks to move on to the second phase, which will cover trade agreements and a potential transition period.

European stocks rallied on the news, with the Stoxx Europe 600 index SXXP, +0.73%  up 0.7%. European markets were also propped up by a rally in bank stocks FX7, +2.22% which came after a long-awaited agreement on banking rules by global finance officials highlighted that most lenders hold a sufficient amount of capital.

The pound GBPUSD, -0.6753%  pound initially spiked to an intraday high of $1.3521, but has since slipped back to $1.3393.

Besides the jobs report, a reading on consumer sentiment fell to a three-month low in December, coming in below analyst expectations. Separately, wholesale inventories fell 0.5% in October.

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What are strategists saying?

“I thought the jobs report was really good. It’s hard to argue with anything on there, except the low level of wage growth gives us some pause,” said J.J. Kinahan, chief market strategist at TD Ameritrade. “Wage growth is a conundrum, and that will make the Fed’s upcoming statement really interesting. We have to see what they say about inflation because we’re just not getting it.”

Which stocks are in focus?

Gilead Sciences Inc. GILD, +2.06%  said late Thursday it will buy privately held cellular therapy company Cell Design Labs Inc. for $567 million. Gilead shares rose 2.1%.

The stock was one of the biggest boosts to the health-care sector. Among other big gainers, Vertex Pharmaceuticals Inc. VRTX, +3.48%  was up 3.5%, as was Mylan N.V. MYL, +3.48% Celgene Corp. CELG, +3.27%  rose 3.3% while Alexion Pharmaceuticals Inc. ALXN, +7.19%  jumped 7.2%.

Shares of American Outdoor Brands Corp. AOBC, -9.51%  tumbled 9.5% after the gun maker late Thursday reported a drop in profit and forecast continued struggles amid “challenging market conditions.”

United Natural Foods Inc. UNFI, +0.43%  rose 0.4% a day after it reported stronger-than-expected sales and raised its full-year forecasts.

United Continental Holdings Inc. UAL, +0.03% said it would buy back an additional $3 billion in shares. Shares ended flat after rising for much of the session.

U.S.-listed stocks of European banks were also notably higher after an agreement on banking rules. Shares of Deutsche Bank AG DB, +2.81%  rose 2.8%, Royal Bank of Scotland Group PLC RBS, +2.00%  added 2% and Barclays PLC BCS, +2.24%  gained 2.2%.

What are other markets doing?

Asian stocks closed firmly in positive territory, with Japan’s Nikkei 225 index NIK, +1.39%  staging a 1.4% rally.

Crude oil prices CLF8, +1.15%  rose 1.2% while gold prices GCG8, -0.21% dropped 0.3% to $1,247.80 an ounce.  

Bitcoin BTCUSD, -4.06%  slipped back below $15,000, just hours after blasting through the $17,000 milestone.