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The markets rocketed higher Friday, shedding weekly losses, after a key report relieved traders concerns about the Fed's bond-buying program and boosted confidence in the economy.
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The Dow Jones Industrial Average jumped 208 points, or 1.4%, to 15248, the S&P 500 rose 20.8 points, or 1.3%, to 1643 and the Nasdaq Composite gained 45.2 points, or 1.3%, to 3469.
The Federal Reserve and the American economy have been two themes that have driven Wall Street this week. The Dow and broader S&P 500 have had tough weeks, but managed to cut losses and even post gains after Friday's rally.
For the week, the Dow advanced 0.88%, the S&P climbed 0.78% and the Nasdaq gained 0.39%.
The jobs report -- generally considered the key economic event of the month -- is taking on even more significance amid traders' near obsession with when the Fed will begin tapering its giant bond-buying operation, dubbed QE3. That's because the central bank has a dual mandate to keep the unemployment rate near its natural level, while keeping inflation in check.
The Labor Department said nonfarm payrolls rose by 175,000 in May, beating Wall Street’s expectations by 5,000. The unemployment rate ticked up to 7.6% for the month from 7.5% in April. The labor force participation rate came in at 63.4% from 63.3% in April.
Goldman Sachs pinned the increase in the unemployment rate to people re-entering the labor force, generally seen as a positive development.
"The caveat is that these numbers are subject to an error of plus or minus 100,000, but this initial reading is positive news for the U.S. economy, especially as 3,000 government jobs were cut during the month," said Chris Williamson, chief economist at Markit.
Barclays said the report doesn't change its view on when the Fed will begin trimming QE3.
"The May employment report contained both pluses and minuses and Federal Reserve policymakers can view this report several different ways," economists at the Britain-based investment bank wrote to clients. "In that regard, we do not see the number as providing clarity on the state of improvement in labor markets and the potential for a reduction in the pace of asset purchases."
Elsewhere, markets in Japan, which have flown higher this year, waded into bear-market territory overnight before rebounding somewhat.
Oil and gasoline futures were in the green. The benchmark U.S. crude oil contract rallied $1.27, or 1.3%, to $96.03 a barrel. Wholesale New York Harbor gasoline climbed 0.33% to $2.86 a gallon. In metals, gold fell $32.80, or 2.3, to $1,383 a troy ounce.
The Euro Stoxx 50 fell 0.03% to 2675, the English FTSE 100 dipped 0.06% to 6332 and the German DAX slumped 0.29% to 8075.
In Asia, the Japanese Nikkei 225 ticked down by 0.21% to 12878 and the Chinese Hang Seng sold off by 1.2% to 21575.