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Market Snapshot: Stock-index futures point higher ahead of October jobs report, manufacturing data

Stocks ended sharply higher Friday, with the S&P 500 and Nasdaq Composite indexes surging to fresh records, and the Dow eyeing one of its own, after the Labor Department estimated the U.S. economy added 128,000 new jobs in October and upwardly revised its estimate of employment growth in September and August.

The stock market rally came despite indications the U.S. manufacturing sector was still contracting in October, though slightly less fast than in the previous month.

What are major indexes doing?

The Dow Jones Industrial Average DJIA, +1.11% rose 301.13 points, or 1.1%, to 27,347.36. The S&P 500 index SPX, +0.97% touched a fresh high after gaining 29.35 points, or 1%, to 3,066.91. The Nasdaq Composite index COMP, +1.13% jumped 94.04 points, or 1.1%, at 8,386.40.

Read:Dow and S&P 500 are set to rise at least another 5% in the next 2 months — if this pattern holds

What’s driving the market?

The U.S. economy created 128,000 new jobs in October, above economist’s estimates of a 75,000 gain, while the unemployment rate ticked higher to 3.6%, in line with expectations. Furthermore, the government revised up the number of jobs created in August and September by a total of 95,000.

Wage growth rose by 0.2% in October and 3% from a year ago at a slightly lower pace than earlier in the year, but still faster than overall consumer prices.

“It’s hard not to be excited about this jobs report,” JJ Kinahan, chief market strategist at TD Ameritrade told MarketWatch. “There are tons of positives, including the uptick in jobs gains for previous months.

The numbers reflect momentum in the American, consumer-driven economy heading into the fourth quarter, Kinahan added. “Jobs have an amazing way of creating confidence in the economy.”

See: U.S. adds better-than-expected 128,000 jobs in October as economy holds strong

However, the latest survey-based take on the U.S. manufacturing sector was also in focus. The Institute for Supply Management’s October manufacturing activity index came in at 48.3% in October, below expectations for a 49% reading, but above the 47.8% seen in September. Any reading below 50% indicates contraction.

“The manufacturing sector weakness appears to be stabilizing after falling below the 50 level and into recession in August,” MUFG chief economist Chris Rupkey, said. “The outlook for the nation’s factories isn’t growing any worse and the manufacturing recession isn’t intensifying.”

See: U.S. manufacturers still suffering from China trade fight, tepid global economy, ISM finds

Spending on U.S. construction projects rose 0.5% in September, above economists’ expectations for a 0.3% rise, according to a MarketWatch poll and above the 0.3% decline in August

Stocks received a boost this week also after the Federal Reserve delivered a widely expected interest rate cut but also signaled it would pause before making any further moves.

“October employment and upward revisions to the prior two months underscore the Fed’s perception that the economy is in a ‘good place,’” said Steve Blitz, chief U.S. economist for TS Lombard, in a note.

“We can certainly quibble with their idea, based alone on the jobs created — about 61% of service sector jobs created last month were in low paying healthcare and leisure, typical for this cycle,” he said. “But jobs are jobs and the steady percentage of total employed aged 25 to 34 augurs well for consumer discretionary stocks in the coming months. And a stable equity market at the very least loops right back into supporting consumer spending and, by extension, employment.”

Federal Reserve Vice Chairman Richard Clarida on Friday said the stance of monetary policy was appropriate, and suggested the hurdle for more interest rate cuts is high. “The economy is very resilient. The consumer has never been in better shape,” Clarida said.

Read: Fed’s Clarida says he is ‘very happy’ with the stance of interest-rate policy

As the busiest week for U.S. corporate earnings reports drew to a close, stocks also received some support from the results. About 70% of S&P 500 index companies have reported quarterly numbers and of those 75% have reported better-than-feared earnings, according to Factset.

What companies are in focus?

Alphabet Inc.’s GOOG, +1.08% Google will acquire Fitbit Inc. FIT, +15.53% in a $2.1 billion deal, the companies announced Friday.

Several heavyweights issued earnings results Friday morning including Dow component Exxon Mobil Corp.XOM, +3.00%, whose stock was 2.8% higher after the oil company reported profits and sales that fell less than expected.

Fellow energy firm Chevron Corp.CVX, +0.06% reported profits and sales that fell more than expected in the third quarter. Shares dipped slightly.

Shares of AbbVie Inc.ABBV, +2.77% rose 2.8% after the drugmaker reported better-than-expected earnings and revenue, raised its full-year outlook and boosted its dividend by 10%.

See:Chip-equipment companies suggest a recovery is on the way

Shares of Colgate-Palmolive Co. CL, -2.61% fell 2.8% after the consumer-products giant reported earnings growth that slightly beat expectations, while revenue fell short in the third quarter.

American International Group Inc. AIG, +1.51%reported a profit in the third quarter from a loss in the year-ago third quarter, but missed earnings-per-share forecasts. Shares rose 1.3%.

Newell Brands Inc.NWL, +8.59% shares gained 8.5% after it reported third-quarter profit and sales that topped expectations, while also raising the full-year outlook for both.

Shares of Pinterest Inc.PINS, -17.02% tumbled after millions of shares became available for trade. Even after adjusting for share-based compensation related to its initial public offering, Pinterest still missed analyst earning estimates late Thursday.

Car-rental company Avis Budget Group Inc.CAR, -6.60% shares fell 8.4% after posting a drop in adjusted third-quarter profit that came in well below market expectations.

How are other markets trading?

The yield of the 10-year U.S. Treasury noteTMUBMUSD10Y, +1.55% rose 2 basis points to 1.71%, after falling 10.7 basis points Thursday, its largest daily decline in more than 3 months.

In commodities markets, the price of West Texas Intermediate crude oil for December delivery CLZ19, +3.78% rose $1.89, or 3.5% to $56.08 a barrel on the New York Mercantile Exchange, while the price of an ounce of gold GCZ19, +0.13% was virtually unchanged at $1,514.30 on Comex. The U.S. dollar edged about 0.2% lower, per the ICE U.S. dollar index DXY, -0.24% .

In Asia overnight, stocks closed mostly higher; the China CSI 300 000300, +1.69% added 1.7%, Hong Kong’s Hang Seng index HSI, +0.72% advanced 0.7%, while Japan’s Nikkei NIK, -0.33% ell 0.3%. In Europe, stocks were trading mostly higher, as evidenced by the Stoxx Europe 600’s SXXP, +0.68% 0.7% gain.