Wall St. ends up sharply on rate cut hopes, trade optimism

New York (Reuters) – Wall Street’s major indexes charged higher on Friday, as sharply slowing U.S. job growth boosted hopes for Federal Reserve interest rate cuts while optimism about potential progress in U.S. trade fights with China and Mexico added to risk appetites.

Investors bet that labor market weakness would give the Fed a reason to provide the economy with more support, pushing the S&P 500 and the Dow to their biggest weekly gains since the end of November, right before a massive year-end sell-off.

A Labor Department report showed nonfarm payrolls increased by 75,000 jobs last month, much smaller than the 185,000 additions estimated by economists in a Reuters poll, suggesting the loss of momentum in economic activity was spreading to the labor market.

As a result traders raised bets for a rate cut in July followed by two more rate cuts by year-end.

“The jobs report indicates there’s some weakness but the economy does remain relatively robust at this point,” said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

Investors are putting weak jobs “in the context that it might result in a more timely Fed action which would be more supportive than if they wait too long,” he said.

But others noted that investors appeared to give more weight to Fed policy than economic data.

“Right now the market is willing to accept disappointing growth in exchange for the prospect of lower rates,” said Jack Ablin, chief investment officer at Cresset Capital Management in Chicago. “We’re addicted to low rates and we’re willing to forsake our economic growth in exchange for those low rates.”

The Dow Jones Industrial Average rose 263.28 points, or 1.02%, to 25,983.94, the S&P 500 gained 29.85 points, or 1.05%, to 2,873.34 and the Nasdaq Composite added 126.55 points,

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