Wall St advances in wake of payrolls report

By Chuck Mikolajczak

NEW YORK (Reuters) - U.S. stocks advanced on Friday, after a stronger-than-expected monthly payrolls report lent weight to a belief that the U.S. Federal Reserve will hike interest rates in June.

Nonfarm payrolls increased more than expected in January and wages rebounded, while jobs for November and December were revised sharply higher. The unemployment rate ticked up to 5.7 percent as a result of an increased labor force.

"The wage growth appears to be the breakthrough that bulls were looking for to say the economy can actually be self sustaining," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

 

After the report, traders added to bets that the central bank will start to hike interest rates by mid-year.

The utilities sector <.SPLRCU>, which had been used as a bond proxy by investors in the low-rate environment, lost 2.1 percent as the worst-performing S&P 500 sector.

In contrast, financials <.SPSY>, which stand to see an increase in profits from higher rates, gained 1.7 percent.

"We can keep eating donuts on easy Fed policy or we can maybe start to digest something more substantial, and for me that is wages, spending and profits," Ablin said.

Twitter jumped 15.8 percent to $47.77 after it beat Wall Street's profit and revenue targets in the fourth quarter.

LinkedIn surged 14.2 percent to $271.77 after the corporate networking site reported a higher-than-expected 44 percent jump in quarterly revenue as more businesses used its services to assess candidates for employment.

But action camera maker GoPro Inc tumbled 10 percent to $48.90 after it forecast a current-quarter profit that could miss Wall Street expectations and said its chief operating officer was resigning.

The Dow Jones industrial average <.DJI> rose 36.18 points, or 0.2 percent, to 17,921.06, the S&P 500 <.SPX> gained 7.44 points, or 0.36 percent, to 2,069.96 and the Nasdaq Composite <.IXIC> added 18.89 points, or 0.4 percent, to 4,783.98.

The S&P 500 <.SPX> is up 3.8 percent for the week, its best weekly performance since October, buoyed by a rebound in oil prices. U.S. crude gained 2.4 percent to $51.70 on Friday while Brent advanced 2.3 percent to $57.86, putting it on pace for its second straight weekly advance.

The Dow is up 4.4 percent for the week, on track for its best week since December 2011, while the Nasdaq is up 3.2 percent for the week.

In merger news, Harris Corp said it would buy Exelis Inc in a deal valued at about $4.75 billion, combining two big suppliers to the U.S. military at a time when the government is squeezing spending on defense.

Harris shares rose 7.3 percent to $74.59 while Exelis jumped 34.8 percent to $23.88.

Declining issues outnumbered advancing ones on the NYSE by 1,525 to 1,427, for a 1.07-to-1 ratio on the downside; on the Nasdaq, 1,606 issues rose and 951 fell for a 1.69-to-1 ratio.

The benchmark S&P 500 index was posting 38 new 52-week highs and 2 new lows; the Nasdaq Composite was recording 86 new highs and 18 new lows.

(Editing by Bernadette Baum)