Dow ends up 370 on strong jobs report

U.S stocks skyrocketed Friday — with the Dow ending up 370 points — after the government's November jobs report topped expectations and signaled economic strength, paving the way for a Federal Reserve rate hike later this month.

The economy added 211,000 jobs in November, topping expectations of 200,000 and reaffirming the strength of the U.S. labor market and the economy. The nation's unemployment rate was unchanged at 5%, and inline with expectations.

The Dow Jones industrial average, S&P 500 and Nasdaq composite gained 2.1% each, with the Dow and S&P 500 springing back into positive territory for the calendar year.

It was the best one-day gain for the blue-chip Dow since since a 390-point climb on Sept. 8.

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Investors reacted to the near certainty of a Fed rate increase in two weeks and the comfort of knowing the Fed will raise rates gradually.

"The November jobs report was solid, solidifying the case for a rate hike at the Dec. 16 meeting, but still suggests a slow hiking cycle," Bank of America Merrill Lynch told clients in a report.

Adds Joseph Lake, global economist for The Economist Intelligence Unit: "This jobs report was music to the ears of the Fed."

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Today's big gains come a day after Thursday's 1.4% S&P 500 selloff on fears that the European Central Bank didn't deliver enough stimulus to boost growth and inflation in the struggling eurozone. Global markets continue to be moved largely by policy decisions by central bankers to jumpstart economic growth seven years after the 2008 financial crisis.

The nation’s central bank, via comments to Congress from Chair Janet Yellen this week, was already on record as saying it thinks the U.S. economy is finally strong enough to withstand the first interest-rate increase in nearly 10 years.

And today's solid jobs number backed up the central's bank confidence.

"The runway has been cleared for liftoff," Michael Gapen of Barclays said in a note.

One of the two primary indicators the Fed focuses on is the health of the U.S. employment market, as well as the outlook for inflation. Well, a blowout jobs report in October, when the economy created 271,000 new jobs, pushed the odds of a rate hike at the Fed’s December meeting to roughly 75%. And the second straight month of 200,000-plus jjob gains all but sealed the deal for a December rate hike.

Even before today's jobs report, Wall Street was pretty much convinced the Fed would announce the start the rate liftoff on Dec. 16.

Wall Street is also be eyeing wage growth, as signs of workers earning more is a signal of strength and often presages a rise in inflation, which the Fed is hoping for.

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Steve Blitz, chief economist at ITG, said before the 8:30 a.m ET jobs announcement that all it would take is job gains north of 150,000 for the Fed to pull the trigger.

“(150,000) should be a number that adds to the general perception that the Fed will finally make its first rate hike” since 2006, Blitz predicts. It would take a jobs number of 100,000 or below “to make the Fed take notice” and consider holding off again on raising rates.

Europe markets fell, with the DAX of Germany off 0.3%, adding to its 3.6% drop — a 400-point loss — of Thursday.

Adam Shell on Twitter: @adamshell.