Stellar jobs data boost Wall Street

287,000 jobs added in June, beating estimates

Wall Street rallied on Friday to recover all of its post-Brexit losses after data showed the best US job growth in eight months in June.

After a dismal report for May that raised concerns about the health of the economy, employers added 287,000 jobs in June, beating market expectations for the first time in four months.

Analysts on average had expected the economy to add 175,000 jobs last month.

The June data suggested that May was an aberration and not indicative of weakness in the labour market that could further delay an interest rate hike by the Federal Reserve.

Britain's vote to leave the European Union set off a global two-day sell-off that dragged the three major US indexes to their lowest in 10 months in June.

“There's reason to believe the Fed could start talking about a December rate hike,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.

Financial stocks, which would benefit from a rate hike, soared following the jobs report. JPMorgan, Wells Fargo and Bank of America rose about 2 per cent, and were the top influences on the S&P 500. Goldman Sachs' 2.2 per cent rise provided the biggest boost to the Dow.

Traders are pricing in a 26.5 per cent chance of a rate increase in December, up from 18.4 per cent ahead of the jobs report, according to CME Group's FedWatch tool.

The Fed meets next on July 26-27.

At 10.41 p.m. IST, the Dow Jones industrial average was up 221.96 points, or 1.24 per cent, at 18,117.84, the S&P 500 was up 28 points, or 1.33 per cent, at 2,125.9 and the Nasdaq Composite was up 71.89 points, or 1.47 per cent, at 4,948.70.

The rally also put the three indexes on track to gain for the second straight week.

The S&P was trading just 9 points away from the all-time high of 2,134.72.

All major S&P indexes were higher, led by a 1.57 per cent rise in the financial sector.

The CBOE Volatility index or Wall Street's "fear gauge", which has swung wildly since the Brexit vote, was near its lowest level this year on Friday.

Gun makers Smith & Wesson and Sturm Ruger rose about 3 per cent on expectations of higher gun sales due to fears of potential gun control policies following the killing of five Dallas police officers.