NEW YORK (REUTERS) - United States (US) stocks jumped on Friday, giving the S&P 500 its first weekly gain in four as the impact of a weak reading on the labour market was dulled by harsh weather conditions and traders focused on expectations of further economic strength.
Nonfarm payrolls added 113,000 jobs in January - well shy of the forecast for 185,000. December payrolls were revised upward by only 1,000 to 75,000. The US unemployment rate in January hit a five-year low of 6.6 per cent, slightly above the 6.5 per cent level that Fed officials have said would prompt them to consider raising benchmark interest rates from near zero.
The rapid drop in US unemployment will make re-crafting the Federal Reserve's easy-money promise a top priority for new chairman Janet Yellen, who will probably avoid tying policy to specific targets in the labour market.
Strong job gains in construction hinted that cold weather was probably not a major factor in January job creation. Traders appeared to expect that the January numbers will be revised upward next month. The data also showed job gains in manufacturing.
"The BLS can tell us there was no abnormal weather in this January number, but I've been freezing for two months. I can't believe there was no weather impact to this number," said Mr Phil Orlando, chief equity market strategist at Federated Investors, in New York.
"So intellectually I am sort of discounting that, and saying I'm going to give the employment report a hall pass until we get into the spring."
Concern about recent soft US data added to worries about growth in China and a sell-off in emerging market currencies and equities to push stocks sharply lower worldwide in the past few weeks.
Near-term concerns have subsided, however, and the spot price for protection against drops in the S&P 500 is again below front-month contracts, following a brief inversion of that curve. The CBOE Volatility Index fell 11.3 per cent to end at 15.29 on Friday after trading above 21 earlier this week.
One-month VIX futures slid 9 per cent to 15.47.
As investors await a batch of fresh data in the coming month, previous expectations for sustained US economic growth are still supporting stock prices.
The S&P 500 closed above its 14-day moving average, a level it had not traded above since Jan 23. The 2.6 per cent gain for the past two sessions marked the S&P 500's best two-day performance in four months.
The Dow Jones industrial average shot up 165.55 points or 1.06 per cent, to end at 15,794.08. The S&P 500 gained 23.59 points or 1.33 per cent, to close at 1,797.02. The Nasdaq Composite added 68.739 points or 1.69 per cent, to finish at 4,125.861.
For the week, the Dow rose 0.6 per cent, the S&P 500 gained 0.8 per cent and the Nasdaq advanced 0.5 per cent.
The S&P 500 fell as much as 6 per cent this week from a record closing high set on Jan 15. Before Friday's gains, the benchmark index was facing its fourth weekly decline in a row - a losing streak not seen since July and August in 2011.
"I'm willing to give the market the benefit of the doubt, particularly with the prices 6 per cent lower than they were three weeks ago," Mr Orlando said.
The tech sector got a lift from Apple Inc after the iPhone maker said it bought US$12 billion (S$15 billion) worth of stock via an accelerated buyback programme and US$2 billion more from the open market in the two weeks since it reported earnings. Apple's stock gained 1.4 per cent to close at US$519.68.
News Corp Class A shares jumped 8.7 per cent to end at US$17.41 a day after the publisher of the Wall Street Journal said cost cuts helped push its profit well above analysts' forecasts.
The stock of online travel agency Expedia soared 14.3 per cent to US$74.45, making it the S&P 500's best performer a day after the company posted a higher-than-expected quarterly profit. Shares of rival Priceline.com added 5 per cent to close at US$1,195.39. Orbitz Worldwide gained 4.2 per cent to US$7.43 and TripAdvisor jumped 9.5 per cent to US$84.45.
Thomson Reuters data showed that of the 343 companies in the S&P 500 that had reported earnings through Friday morning, 67.9 per cent have topped Wall Street's expectations, slightly above the 67 per cent beat rate for the past four quarters and ahead of the 63 per cent rate since 1994.
Bucking Friday's upward trend, shares of LinkedIn fell 6.2 per cent to US$209.59 after the online network for professionals gave revenue forecasts that were below those of analysts.
Shares of Fairway Group Holdings Corp lost 29 per cent to close at US$8.12 a day after the upscale grocery store chain posted quarterly results and announced changes in management.
Volume was light, with about 6.09 billion shares traded on US exchanges, below the 6.94 billion average in January, according to data from BATS Global Markets.
Advancing stocks outnumbered declining ones on the New York Stock Exchange by a ratio of more than 3 to 1. On the Nasdaq, more than two stocks rose for every one that fell.