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Dow jumps 220 points, posts best opening week since 2006

CNBC logo CNBC 1/5/2018 Fred Imbert and Alexandra Gibbs

Stocks ended sharply higher Friday, capping a strong start to the new year as Wall Street shook off jobs data that missed expectations.

The Dow jumped 220 points. The S&P 500 climbed 0.7 percent, with tech stocks rising about 1 percent. The Nasdaq gained 0.83 percent as Alphabet and Amazon shares hit record highs. The major indexes also reached all-time highs.

The Dow and Nasdaq posted their best start to a year since 2006 and their biggest four-day gain since then.

"Valuations long term are stretched but people are looking past that because of the tax cuts," said John Serrapere, the director of research at Arrow Funds. President Donald Trump signed a bill last month that slashed the corporate tax rate to 21 percent from 35 percent. 

The U.S. economy added 148,000 jobs in December, according to the Labor Department. Economists polled by Reuters expected a gain of 190,000.

U.S. stock index futures initially pared gains after the data were released but quickly recovered. Dow futures briefly traded 100 points higher.

The jobs report "keeps inflationary pressures at bay for now, and the Fed less pressured to move beyond the already discounted three rate hikes for 2018," said Quincy Krosby, a chief market strategist at Prudential Financial.

Other data released Friday included the nonmanufacturing ISM index, which fell to 55.9 in December from 57.4 in November. Factory orders, meanwhile, rose 1.3 percent in November, exceeding expectations.

U.S. equities kicked off 2018 with a bang. Entering Friday's session, the major indexes were on track to post weekly gains of more than 1 percent. They have also notched key milestones this week.

Related video: How the Dow got to 25,000

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The Dow closed above 25,000 for the first time Thursday. It took the Dow just 23 trading days to rally from 24,000 to 25,000, marking the fastest 1,000-point move in the index's history. The move is also tied for the fastest ever in terms of calendar days at 35.

The S&P 500 and Nasdaq finished above 2,700 and 7,000, respectively, for the first time ever earlier in the week.

Overseas, international markets posted solid gains on the last trading day of the week as investors shrugged off concerns surrounding geopolitical tensions between North Korea and the West, and focused on the positive momentum seen in markets.

Ths Stoxx 600, which tracks a wide swath of European stocks, rose 0.9 percent.

In Asia, the Nikkei 225 jumped 0.9 percent, while the Shanghai composite gained 0.2 percent.

In corporate news, shares of Target and Lowe's rose 0.4 percent and 1.6 percent, respectively, after being upgraded at Barclays. Analysts cited a stimulus to retailers from the recent tax code overhaul and "improved flexibility to make necessary investments without negatively impacting EPS results."

Cisco shares climbed more than 1 percent, hitting their highest level in nearly 17 years, after Bank of America Merrill Lynch upgraded them to buy from neutral.

"The company is in the early stages of a positive transition to software," analyst Tal Liani said. Liani also noted Cisco has strong free cash flow and a low valuation compared with its competitors.

Google parent Alphabet rose 1.2 percent and hit a record high of $1,113.58. Amazon climbed 1.4 percent and reached an all-time high of $1,223.53.


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