Treasuries fell after a strong U.S. jobs report increased bets of tighter monetary policy while U.S. stocks powered higher on bullish sentiment from Amazon.com Inc. earnings.

The yield on the U.S. 10-year note rose to 1.92 per cent as traders gave roughly even odds to the chance the Federal Reserve will start to raise interest rates with a 50 basis point hike in March instead of a typical quarter point move. 

The S&P 500 gained 0.5 per cent, erasing an earlier loss, while the Nasdaq 100 added 1.3 per cent with Amazon up 14 per cent on a price increase for Prime memberships. The dollar was stronger against major peers while still posting its worst weekly performance since 2020.

U.S. employers added more jobs than forecast last month, despite a surge in Covid-19 infections and related business closures. Nonfarm payrolls gained more than all economists expected and average hourly earnings also rose 0.7 per cent month over month.

“The jobs report blew away expectations across the board,” said Cliff Hodge, chief investment officer for Cornerstone Wealth. “The report is unequivocally good for the economy, but not for markets as the strength in the numbers presents another data point which supports more aggressively hawkish Fed action.”

It’s been a volatile week in markets as investors were jolted by weak numbers at U.S. tech giants including Facebook-owner Meta Platforms Inc., which wiped more than US$250 billion from its market value on Thursday. However, positive earnings from Amazon helped lift sentiment, with the online marketplace and tech company adding roughly US$190 billion to its market capitalization.

“It seems like each day we wake up to, ‘Thank you sir, may I have another?’ as a few tech blowups drag down the overall market,” said Mike Bailey, director of research at FBB Capital Partners. “There is an interesting behavioral metric where one bad thing requires four to five good things to make up for it.”

Here’s what else Wall Street said Friday:

• “Hopefully now that the week is coming to a close, we’re seeing that the economy is still strong based on this jobs report, that people can take a breath and really reassess what is the economic environment that we’re going into in the year ahead.” -- Lindsey Bell, chief markets and money strategist at Ally
• “The January employment report was strong overall, informs us that businesses are willing to look through the Omicron shock (which is actually news), and reinforces the case for the Fed tightening.” -- Gerard MacDonell, analyst at 22V Research
• “It was always going to be a surprise as far as the payrolls report was concerned, given the range of outcomes. And we got a positive surprise ... The Fed is further and further behind and they’re going to have to catch up.” -- Anastasia Amoroso, chief investment strategist at iCapital
• “The data reinforces the case for hikes and QT and I think the 10-year should rise more, especially real rates. With the 10-year getting close to 2 per cent, I worry about mortgage-backed securities convexity hedging and more bond fund outflows.” -- Priya Misra, global head of rates strategy at TD Securities
• “A better-than-expected jobs report only fuels the Fed’s fire to raise rates, and act quickly. While they’ve already signaled that the labor market is in a good place, there was potential for omicron to derail that progress -- and that just doesn’t seem to be the case. So with the market typically unwelcoming of news that could accelerate the pace of action from the Fed, we could see some volatility.” -- Mike Loewengart, managing director of investment strategy at E*Trade from Morgan Stanley

Dip buyers have hoped a stronger earnings season would keep equities attractive and counter some concerns about rate hikes in the face of higher inflation. Of the 272 companies in the S&P 500 that have reported results, 82 per cent have met or beaten estimates, with profits coming in 8.8 per cent above projected levels.

Still, signs of stubborn price pressures abound with the latest data showing U.S. gasoline prices at the highest in more than seven years. Crude oil gained 2.2 per cent in New York, extending a seven-year high, while banks including Goldman Sachs Group Inc. now forecast Brent will reach US$100 a barrel.

Hawkish comments from European Central Bank President Christine Lagarde and a Bank of England interest-rate hike underlined risks from inflation. While a selloff in the region’s bonds eased Friday, the mood in the stock market was sour with Europe’s Stoxx 600 falling 1.4 per cent.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.5 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 1.3 per cent
• The Dow Jones Industrial Average was little changed
• The MSCI World index rose 0.4 per cent

Currencies

• The Bloomberg Dollar Spot Index rose 0.2 per cent
• The euro rose 0.1 per cent to US$1.1454
• The British pound fell 0.5 per cent to US$1.3530
• The Japanese yen fell 0.2 per cent to 115.20 per dollar

Bonds

• The yield on 10-year Treasuries advanced nine basis points to 1.92 per cent
• Germany’s 10-year yield advanced six basis points to 0.21 per cent
• Britain’s 10-year yield advanced four basis points to 1.41 per cent

Commodities

• West Texas Intermediate crude rose 2.2 per cent to US$92.23 a barrel
• Gold futures rose 0.2 per cent to US$1,808.30 an ounce