(Bloomberg) --U.S. stocks rallied to erase losses sparked by Britain's vote to exit the European Union, with the S&P 500 Index nearing a one-year high as stronger payroll growth calmed concerns that slower job growth would weigh on the economy.
Friday's gains have restored roughly $1.4 trillion of market value that was erased in the aftermath of the U.K. vote. Since the two-day selloff that began June 24, the S&P 500 Index has climbed on six of eight days. Banks and automakers were among the strongest performers today, with Goldman Sachs Group Inc. and JPMorgan Chase & Co. increasing more than 2.2 percent. General Motors Co. climbed 3.2 percent, on track for the most in almost three months.
The S&P 500 added 1.3 percent to 2,124.60 at 11:54 a.m. in New York, highest since July 21, 2015. The Dow Jones Industrial Average rose 203.88 points, or 1.1 percent, to 18,099.76, near a three-month high. The Nasdaq Composite Index advanced 1.4 percent. Trading volume in S&P 500 shares was in line with the 30-day average for this time of day.
“What this does is it alleviates worries that economy was stalling,” said Quincy Krosby, a market strategist at Prudential Financial Inc., which oversees about $1.2 trillion. “This is important for the equity market because if we see the 10-year yield move higher, it should put pressure on utilities which have done very well and perhaps give some more of the cyclical sectors a bounce this morning. It's solid, not stellar, but that's what the market has needed.”
A report today showed America's job market stirred to life after a two-month lull, as payrolls climbed by the most since October, exceeding the highest estimate in a Bloomberg survey. The jobless rate rose to 4.9 percent as more people entered the labor force, while wages advanced less than projected. Revisions to prior reports subtracted a total of 6,000 jobs to overall payrolls in the previous two months.
The figures will help reassure policy makers that companies are staying the course on hiring in the face of weaker profits and overseas developments such as Britain's vote to leave the EU. Federal Reserve officials flagged concern over job creation at their last meeting, signaling fading urgency for the need to increase interest rates.
“The strength you're seeing in U.S. equities is a knee-jerk reaction to any kind of big number that comes out,” said Stephen Carl, principal and head equity trader at Williams Capital Group LP. “This will only add to the Fed's indecision over what to do. The conviction for a Fed rate hike won't quite be there yet, which could explain why we're reacting positively.”
As anxiety ebbs, the CBOE Volatility Index sank 7.7 percent Friday to a one-month low. The measure of market turbulence known as the VIX was on the way to the first back-to-back weekly declines since April, slipping almost 13 percent in the last three days. A Goldman Sachs basket of most shorted shares in the Russell 3000 Index rallied for the seventh time in eight days, rising nearly 12 percent in the period.
Since the Brexit vote sparked its worst two-day tumble in 10-months, the S&P 500 has rebounded amid signals that central banks would loosen monetary policy to limit the fallout, as well as on data showing better-than-forecast expansion in services industries and today's stronger jobs report. The benchmark has rallied more than 6 percent over eight sessions and climbed to back to within 1 percent of a record set more than 13 months ago.
The one-two punch from May's weak employment report and the U.K.'s vote to secede had all but erased any wagers on a Fed rate increase this month, after probabilities for a move were 55 percent at the beginning of June. Despite the rebound in job gains last month, traders are still pricing in less than even odds of a boost to borrowing costs until December 2017.
Investors are also waiting for cues on the health of corporate America, with Alcoa Inc. unofficially kicking off the second-quarter earnings season next week. Analysts predict profits will drop 5.7 percent at S&P 500 firms, which would make it the fifth straight quarterly decline, the longest streak since 2009.
In Friday's trading, all of the S&P 500's 10 main industries rose, with financial, raw-materials, industrial and consumer discretionary companies adding more than 1.5 percent. Technology shares increased at least 1.4 percent.
Financial stocks in the benchmark climbed 1.8 percent, paced by CBRE Group Inc.'s 6.3 percent increase and the biggest gain since January for Synchrony Financial. The private label credit-card issuer's stock rose 5.5 percent after its inaugural dividend exceeded analyst estimates.
All 68 companies in the S&P 500 Industrials Index rose at least 0.4 percent on Friday, led by a 3.9 percent gain for United Continental Holdings Inc. United Rentals Inc. and Delta Air Lines Inc. climbed at least 3.3 percent.
Gap Inc., the biggest U.S. apparel-focused retailer, lifted consumer discretionary shares with a 5.2 percent gain. The company posted June sales that topped analysts' estimates, a sign its long-promised turnaround could be taking hold.
Among shares moving on corporate news, Juno Therapeutics Inc. plunged 31 percent, the most since going public in 2014, after after three patients died in a trial for its lead cancer therapy and U.S. regulators put the study on hold.
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