Stocks jump on blowout jobs report and upcoming talks with China

/ CBS/AP

What's in store for the economy in 2019?

Stock markets jumped Friday as investors welcomed news of trade talks between the U.S. and China next week and the U.S. government reported a big increase in hiring in December. The Dow Jones Industrial Average soared about 500 points.

The Labor Department said U.S. employers added 312,000 jobs last month, a far stronger result than experts had anticipated. U.S. stocks have tumbled over the last three months as investors worried that the economy might slow down dramatically because of a variety of challenges including the trade dispute and rising interest rates. Some analysts said investors were acting as if a recession was on the horizon, despite a lack of evidence that the U.S. economy is struggling.

"It's hard to square recession worries with the strongest job growth we've seen in years," said Alec Young, managing director of global markets research for FTSE Russell. "The strong December jobs report is a net positive for stocks because investors' biggest concern has been slowing growth."

The S&P 500 index climbed 63 points, or 2.6 percent, to 2,511 at 10:45 a.m. Eastern time. The Dow gained 563 points, or 2.5 percent, to 23,185. The Nasdaq composite jumped 213 points, or 3.3 percent, to 6,674.

China's Commerce Ministry said talks will be held Monday and Tuesday in Beijing, and market watchers are hoping for signs the world's largest economic powers will make progress toward resolving their dispute. Trade tensions between the two have dragged on for nearly a year and uncertainty over their outcome has dragged down stock indexes around the world.

The U.S. and China have raised tariffs on billions of dollars of each other's goods in a fight over issues including Beijing's technology policy, which Washington alleges is predatory. Last month, President Donald Trump and Chinese leader Xi Jinping agreed to 90-day ceasefire as a step toward defusing tensions.

Why the recent stock market volatility is "normal"

Technology companies, banks, health care and industrial companies all made strong gains. Microsoft rose 3.1 percent to $100.41 and Deere gained 3.4 percent to $148.96. Retailers and internet companies rose as well, with Amazon up 2.4 percent at $1,536 and Google's parent company, Alphabet, rising 2.3 percent to $1,048. Most of the companies in those industries stand to do better in times of faster economic growth.

Stocks in the U.S. were on track to regain most of Thursday's losses. The S&P 500 fell 2.5 percent after Apple said iPhone sales in China are falling and a survey suggested U.S. factories grew at a weaker pace. Technology companies took their biggest losses in seven years.

Bond prices also changed course and moved sharply lower. The yield on the 10-year Treasury note rose to 2.65 percent after it plunged to 2.55 percent Thursday, its lowest in almost a year. That helps banks, as higher interest rates allow them to make bigger profits on mortgages and other loans.

First published on January 4, 2019

© 2019 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.

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