Dow jumps 450 points Friday as latest U.S. data raises hope that inflation may be easing

U.S. stocks rose Friday after the December jobs report and a manufacturing survey showed signs that inflation may be cooling amid the Federal Reserve’s interest rate hikes.

The Dow Jones Industrial Average increased 487 points, or 1.48% The S&P 500 gained 1.34% and the Nasdaq Composite ticked 1.16% higher, but was weighed down by Tesla shares, which fell more than 2% after the company lowered prices on some vehicles in China.

The December nonfarm payrolls report showed that the U.S. economy added 223,000 jobs last month, slightly higher than the expected 200,000 jobs economists polled by the Dow Jones expected. In addition, wages grew slower than anticipated, increasing 0.3% on the month where economists expected 0.4%.

“All investors care about is that the data suggests inflation is moving towards the Fed’s target,” said Michael Arone, chief investment strategist at State Street Global Advisors. “That’s all investors care about and average hourly earnings suggest inflation continues to slow. They are excited about that.”

Stocks rose again, but remained off highs of the day when the ISM’s non manufacturing Purchasing Managers’ Index showed that the services industry contracted in December, a sign that the Fed’s rake hikes may be working to slow the economy.

The Dow on Thursday fell more than 300 points after the release of a stronger-than-expected ADP private payrolls report raised concern that the Fed would have to continue to hike rates and hold them high, stoking fears of a U.S. recession.

With Friday’s gains, stocks may tip into positive territory on the week. The Dow is currently up 0.48% in the first week of the year and the S&P 500 is up 0.30%. The Nasdaq is still down on the week, set to fall 0.71%.