U.S. equities rallied on Friday, with financials rising around 2 percent, following a stronger-than-expected employment report.
The Dow Jones industrial average jumped around 180 points — posting its best trading day of the year — with Goldman Sachs contributed the most gains. The S&P 500 rose 0.7 percent, with financials leading advancers. The Nasdaq composite gained 0.5 percent and closed at a record high.
The U.S. economy added 227,000 jobs in January, while the unemployment rate ticked higher to 4.8 percent, the Bureau of Labor Statistics said Friday. Economists polled by Reuters expected payrolls to grow by 175,000 with the unemployment rate holding steady.
"I think the jobs report, although wage growth was not where people wanted to be, was pretty good," said JJ Kinahan, chief market strategist at TD Ameritrade. He also said jobs growth in construction and health care were two positives from the report.
Average hourly earnings, however, rose just 3 cents and 2.5 percent on an annualized basis. The average work week was unchanged at 34.4 hours.
"Here's the good: It's better than expected and much better on the private payrolls," said Art Hogan, chief market strategist at Wunderlich Securities, adding the labor force participation rate also rose slightly. "When you see the unemployment rate go higher for the right reason, that's a positive."
The report was "what the Fed needs, but the wages growth was weaker than expected," said Quincy Krosby, market strategist at Prudential Financial. "When you have an economy that is so dependent on consumer, wages are very important."
U.S. Treasurys whipsawed following the report's release, with the benchmark 10-year note yield last rising to 2.47 percent, while the short-term two-year note yield held near 1.1205 percent. "Had wages moved [further] higher, the 10-year yield have moved above 2.5 percent," said Prudential's Krosby.