US stocks rally after jobless rate sinks to 3.9%

US stocks logged their biggest advance in an almost four weeks after the jobless rate hit an 18-year low. The dollar pared earlier gains and Treasury yields flattened out as the market assessed the impact of America’s inconclusive trade talks with China.

The S&P 500 Index rose Friday afternoon, led by technology and financial shares, erasing almost all its losses for the week.

US hiring rebounded less than anticipated in April but the unemployment rate dropped below 4 per cent for the first time since 2000. Wage gains unexpectedly cooled, suggesting the job market still has slack to absorb. The report’s implications for monetary policy will be eyed after the Federal Reserve kept rates on hold this week, saying inflation is near its target without suggesting any need to accelerate its hiking path.

“This was a really solid number — it shows all the job growth that the economy needs without wages picking up, which would be detrimental to margins,” Sameer Samana, global technical and equity strategist for Wells Fargo Investment Institute, said by phone. “It should all be supportive of further consumption, which should keep the economy going at a very steady pace without inflation being a major issue, which historically has been very good for investments.”

Markets were also following talks between US and Chinese officials in Beijing intently for signs that the world’s two biggest economies are making progress on trade, but there’s been limited advancement so far. US officials asked China to bring forward reductions in its trade surplus, raising the hurdle for any overarching deal, while state-run news agency Xinhua said the two parties agreed on some issues but disagreed on others.

Health care and technology companies led gains in the Stoxx Europe 600 index as the euro slipped amid mounting concern about the region’s economic outlook. Financials recovered some earlier losses incurred after disappointing earnings reports from BNP Paribas SA, Societe Generale SA and HSBC Holdings Plc stocks from Sydney to Hong Kong retreated earlier. Core European bonds declined.

Meanwhile, Turkey’s lira continued its descent on Friday, hitting a record low against the dollar amid concern that monetary policy remains too loose to deal with an overheating economy. Most emerging-market currencies declined against the greenback.

West Texas oil hit a three-year high as traders weighed an increase in stockpiles against concern about US sanctions on Iran. Gold gained.