U.S. stocks advance amid 3-week rally after mixed jobs report

U.S. stocks rose to extend a three-week rally as investors shook off earlier reticence over a decline in wages to focus on a surge in hiring that bolstered optimism the economy can weather a global slowdown and bouts of financial market turmoil. The Standard & Poor's 500 Index climbed 0.3% to 1,998.29 at 10:54 a.m. in New York, after erasing a 0.3% drop. The gauge rose Thursday to the highest since Jan. 5, and is on track for its third straight weekly gain, the longest such stretch this year. The Dow Jones Industrial Average added 48.49 points, or 0.3%, to 16,992.39, and the Nasdaq Composite Index increased 0.2 percent. A report today showed employers added more workers in February than projected, though wages unexpectedly declined. The 242,000 gain followed a 172,000 rise in January that was larger than previously estimated. The jobless rate held at 4.9%, while average hourly earnings dropped, the first monthly decline in more than a year. Bigger wage gains are needed help move inflation closer to the Federal Reserve's goal. “The reaction would be more bullish if we hadn't run up so much going into this report,” said Nick Kalivas, senior equity product strategist at Invesco PowerShares in Downers Grove, Illinois, which has about $100 billion in its funds. “This gives investors some confidence in growth going forward. This is a constructive number for the market.” Fed officials gather for their next two-day meeting on March 15, with traders pricing in a less than one-in-10 chance the central bank will increase rates this month. The probability rises to 42% by mid-year, up slightly after the jobs data, while odds for a December move was about 70%. “People are looking at stronger data, but then they start to worry about raised rates — there's a little hesitation there,” said Frank Ingarra, head trader at Greenwich, Connecticut-based NorthCoast Asset Management LLC, which has $3 billion under management. “It makes sense that we're not seeing a screaming high.” The S&P 500 has rebounded 9% from a Feb. 11 low as banks and consumer companies climbed, though the gains have come amid the weakest volume in 2016. Improving economic data has also helped support the rebound, along with speculation central banks will continue to provide stimulus, though some signs of inflation picking up have stepped in to temper optimism. BMO Nesbitt Burns Inc. technical analyst Russ Visch said last week the rally was not sustainable, and pointed today to volume indicators to suggest the run was in its final phase. Visch said in a note the 10-day moving average of volume on the New York Stock Exchange was “contracting steadily” during rally, while healthy rallies have expanding volume. The main U.S. equity benchmark is up 2.6% this week, trimming its annual decline to 2.2%. It fell as much as 11% earlier this year amid concern over global-growth prospects and a deepening oil rout. “There are legitimate reasons to think that this market is breaking higher based on solid data, and reasons to think it could break lower as earnings are under pressure and growth is slower,” said Steve Chiavarone, a portfolio manager with Federated Investors in New York. “One of the main things driving the volatility has been the difference between the market's definition of a gentle hike and what the Fed thinks.” A lack of earnings growth is also giving investors pause in considering whether to chase the recent gains. Analysts predict earnings for S&P 500 members will fall 8% in the first quarter and won't rise again until the third quarter. “Unless corporate earnings start to turn up, there is very limited upside for economically sensitive assets such as equities,” strategists at HSBC Holdings Plc wrote in a note late Thursday.