Wall St climbs as jobs data supports smaller rate hike prospects

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Data shows strong jobs growth; uptick in jobless rate


Starbucks, DoorDash jump on upbeat results


U.S-listed China firms rise on reopening hopes


Indexes up: Dow 0.74%, S&P 0.60%, Nasdaq 0.28%

(Updates to market open)

By Amruta Khandekar

Nov 4 (Reuters) -

Wall Street's main indexes climbed on Friday after an uptick in the U.S. unemployment rate in October overshadowed data showing strong jobs growth and supported hopes that the Federal Reserve could deliver smaller rate hikes in the future.

The U.S. Labor Department's closely watched non-farm payrolls report showed a rise in the

unemployment rate to 3.7% last month from 3.5%

in September, suggesting some loosening in labor market conditions that could give the Fed cover to shift towards smaller rate increases next month.

It also showed average hourly earnings rose 0.4% in October against a forecast of 0.3%, while nonfarm payrolls increased by 261,000 jobs against expectations of 200,000 after rising 263,000 in September.

The report was a key focus area for markets after hawkish comments from Fed Chair Jerome Powell on Wednesday spurred fears that the central bank could keep raising borrowing costs for longer than previously expected.

"Powell should also be pleased that the unemployment rate went up from 3.6% to 3.7%. All members of the Fed want and are expecting unemployment to rise at least a full percentage point," said Bryce Doty, senior portfolio manager at Sit Fixed Income Advisors.

The reading comes on the heels of a conflicting set of data which, while pointing to a slowdown in certain pockets of the economy, has also highlighted resilience in labor demand in the United States despite the Fed's aggressive policy moves to control inflation.

"This one's a step in the right direction because it's the third month in a row of more modest hourly earnings gains," said Jason Pride, chief investment officer for private wealth at Glenmede in Philadelphia.

Traders' bets of a 75 basis point rate hike in December briefly rose to 64.5% after the release of the data but swiftly slipped back to around 60%.

Market focus will now turn to a key inflation reading due next week as well as U.S. midterm elections on Nov. 8, where control of Congress is at stake.

Despite the early gains, the benchmark S&P 500 .SPX and the tech-heavy Nasdaq .IXIC were set for their first weekly decline in three weeks on worries that the Fed would stick to its hawkish stance until it sees strong evidence of price pressures easing and the labor market cooling.

Energy .SPNY was among top sectoral gainers on the S&P 500, up 1.4% as oil prices surged with investors weighing the prospects for an easing of China's COVID curbs.

Such hopes also lifted U.S.-listed shares of Chinese companies including Alibaba BABA.N , JD.com JD.O and Baidu BIDU.O between 2% and 5%.

Megacap growth companies such as Amazon.com AMZN.O and Alphabet GOOGL.O edged up 0.4% and 0.8% respectively.

Meanwhile, CBOE's volatility index VIX, known as Wall Street's fear gauge, hit its lowest level since Sept. 9.

At 9:47 a.m. ET, the Dow Jones Industrial Average .DJI was up 236.10 points, or 0.74%, at 32,237.35, the S&P 500 .SPX was up 22.24 points, or 0.60%, at 3,742.13, and the Nasdaq Composite .IXIC was up 29.32 points, or 0.28%, at 10,372.26.

Starbucks Corp SBUX.O rose 8.6% after it topped Wall Street estimates for quarterly comparable sales and profit, while DoorDash Inc's DASH.N revenue beat lifted the food delivery firm's shares 8.6%.

PayPal Holdings Inc PYPL.O fell 6.0% after the online payments firm cut its annual revenue growth forecast in anticipation of a broader economic downturn.

Advancing issues outnumbered decliners by a 3.43-to-1 ratio on the NYSE and by a 1.51-to-1 ratio on the Nasdaq.

The S&P index recorded 14 new 52-week highs and 15 new lows, while the Nasdaq recorded 40 new highs and 98 new lows.
Reporting by Shubham Batra, Amruta Khandekar and Sruthi Shankar in Bengaluru; Additional reporting by Medha Singh and Ankika Biswas; Editing by Sriraj Kalluvila and Maju Samuel

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