XOM Exxon Mobil Corp

By Avantika Chilkoti and Corrie Driebusch 

Big gains by energy behemoths Exxon Mobil and Chevron lifted the Dow Jones Industrial Average Friday, putting the index on pace for its sixth consecutive week of gains.

January's nonfarm payrolls report also buoyed stocks after showing employers added more jobs than anticipated and unemployment held near historic lows.

The strong report, along with a tick up in wages, supports the newfound optimism in the U.S. economy that has washed over the stock market in the new year. Fears of an economic slowdown late last year have been eased by better-than-feared corporate earnings, a more accommodative Federal Reserve and signals of strength from the labor market.

The blue-chip index added 30 points, or 0.1%, a day after closing out its strongest January in 30 years. Shares of Exxon and Chevron both climbed 3.1% after posting some of their biggest annual profits in years.

Earlier gains in the S&P 500 and Nasdaq Composite disappeared in afternoon trading, however. The S&P 500 fell 0.1%, while the Nasdaq Composite declined 0.3%, both hurt by big declines in shares of Amazon.com. The retailer's shares fell 5.3% after the company cautioned that its spending is likely to increase this year and government restrictions in India could weaken its revenue there.

All three indexes are still on track for gains of at least 1%.

The past week ushered in a big batch of corporate earnings, and with just under 50% of the companies in the S&P 500 having reported results, 70% have reported stronger-than-expected profits, according to FactSet. Companies in the index are on track to post year-over-year earnings growth of 12%, which on one hand marks the index's fifth straight quarter of double-digit earnings growth, but also is the first time growth has fallen below 20% since the fourth quarter of 2017, FactSet data show.

Data from the Labor Department also has painted a better picture than many investors anticipated heading into the new year. U.S. nonfarm payroll numbers rose a seasonally adjusted 304,000 in January, the unemployment rate rose to 4.0% and average hourly wages for private-sector workers grew 3.2% from a year earlier, data released Friday showed. Economists surveyed by The Wall Street Journal forecast that employers added 170,000 jobs during the month and the unemployment rate was steady at 3.9%.

U.S. government bond prices fell on the jobs report. The yield on the 10-year U.S. Treasury note, which moves inversely to prices, rose to 2.691%, from 2.636% ahead of the data and 2.631% on Thursday.

The strong data follows Federal Reserve Chairman Jerome Powell's comments Wednesday that the case for raising rates "has weakened somewhat," which eased concerns about monetary policy in the world's largest economy. The juxtaposition of Mr. Powell's remarks and the stronger-than-expected jobs report has some analysts speculating the Fed may have been too quick to cool its pace of interest-rate increases.

However, even as January's employment numbers looked good, the Labor Department revised figures for December, lowering payroll gains. Also, the unemployment rate ticked up and the labor-force participation rate remains only modestly above multidecade lows touched in 2015.

Overall, stock investors viewed the report as a positive, and shares of a broad swath of companies from industrial firms to technology heavyweights climbed.

With January over and the recent Fed meeting and jobs report complete, investors said the big overhang for stocks is ongoing discussions between the U.S. and China as the two countries try to reach a trade agreement.

"The single most important thing now is the negotiations with China," said Brian Rose, senior economist Americas at UBS Global Wealth Management. "This is a big risk for the economy and stock market."

Comments from President Trump on Thursday suggested another high-level meeting with Chinese President Xi Jinping was in the cards as negotiations continued.

"If we have a Cold War between China and the U.S. like we had with Russia and U.S., then we have a problem," said Didier Rabattu, head of equities at Lombard Odier Investment Managers, who said he is optimistic that tensions will calm in the coming weeks. "Trump is going to make a trade deal with Xi in the short term for a simple reason: He has made one or two political mistakes recently; the shutdown with the wall was a mistake."

In Europe, the Stoxx Europe 600 added 0.3%. Asian markets were mixed, with China's Shanghai Composite up 1.3%, Japan's Nikkei up 0.1% and Hong Kong's Hang Seng Index down marginally.

In commodities markets, U.S. crude oil added 2.8% to $55.29 a barrel.

Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com and Corrie Driebusch at corrie.driebusch@wsj.com

(END) Dow Jones Newswires

February 01, 2019 15:14 ET (20:14 GMT)

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