US Markets

Dow jumps 300 points, S&P 500 rallies to record close after strong October jobs data

Stocks reach record highs following strong jobs report — Here's what three experts say to watch now

Stocks rose sharply on Friday as investor sentiment got a lift from much stronger-than-expected U.S. jobs data.

The Dow Jones Industrial Average closed 301.13 points higher, or 1.1% to27,347.36. The S&P 500 gained 1% to end the day at 3,066.91, a fresh record close. The Nasdaq Composite also hit an all-time high, climbing 1.1% to 8,386.40.

Exxon Mobil was among the best-performing stocks in the Dow on the back of stronger-than-forecast quarterly results. The stock gained 3%. The industrials and financials sectors rose more than 1.4% each. Apple shares rose more than 2% to a record high, lifting the Nasdaq.

"The October jobs report was very strong," said Gus Faucher, chief economist at PNC. "Job growth slowed a bit because of the GM strike, but with the strike over it should bounce back in November."

The U.S. economy added 128,000 jobs in October, the Labor Department said Friday. Economists polled by Dow Jones expected a gain of 75,000 jobs for the previous month. October jobs growth easily beat estimates despite a decline of 42,000 jobs in the autos sector due to a General Motors strike that has now been settled.

Jobs growth data for September and August was also revised substantially higher. September's number was revised up to 180,000 from 136,000. August jobs growth was revised to 219,000 from 168,000.

Trader on the floor of the New York Stock Exchange.
Lucas Jackson | Reuters

Friday's jobs report came after the Federal Reserve cut rates earlier this week by 25 basis points. The Fed signaled a higher bar for further rate cuts, but noted significantly higher inflation is needed before raising rates again. 

Other data released Friday included the Institute for Supply Management's reading on October U.S. manufacturing. The ISM's manufacturing PMI came in at 48.3, representing a bigger-than-expected contraction in the sector. However, some of the survey's internal components showed improvement, offsetting the disappointing headline number. The gauge on U.S. manufacturing fell to its lowest level in a decade in September amid lingering worries around U.S.-China trade talks.

Trade dented stocks on Thursday — the last day of October — after Bloomberg News reported Chinese officials have been casting doubt over the possibility of a long-term trade deal with the U.S. The Dow fell more than 100 points Thursday while the S&P 500 dipped from a record.

"Compared to mid-summer, the overall probability of a trade deal and the risks of a failure are lower, in our view," said Tom Lee, founder and head of research at Fundstrat Global Advisors. "But the closer we get to December 31, one could argue China's relative bargaining position strengthens."

"If markets tumble due to trade failure, this would hurt Trump's 2020 standing. Hence, this remains an important risk," Lee said.

But China said Friday it reached a consensus in principle with the U.S. during trade talks this week. The U.S. Trade Representative's office also said Robert Lighthizer and Treasury Secretary Steven Mnuchin made "progress in a variety of areas and are in the process of resolving outstanding issues."

The corporate earnings season continued on Friday, with Exxon Mobil reporting earnings that topped analyst expectations. U.S. Steel shares rose 14.8% after the company posted Thursday afternoon a smaller-than-expected quarterly loss. Qorvo also reported better-than-expected results and issued strong guidance for the current quarter, sending its stock up more than 20%.

Around 70% of S&P 500 companies have reported quarterly numbers thus far, according to FactSet. Of those companies 75% have reported better-than-expected earnings.

—CNBC's Silvia Amaro contributed to this report.