Wall Street climbs on solid jobs data, trade hopes

NEW YORK (Reuters) - Wall Street ended solidly higher on Friday as a strong jobs report and optimism about U.S.-China trade negotiations ahead of an upcoming deadline helped stoke investor risk appetite.

All three major U.S. stock indexes gained ground, hovering within 1% of record highs set last week.

But as a tumultuous week of contradictory trade news and mixed economic data drew to a close, only the S&P 500 posted a weekly gain. The Dow and the Nasdaq ended the session down from last Friday’s close.

The U.S. economy added 266,000 jobs in November, the largest increase in 10 months, according to the Labor Department, blowing past analyst estimates. The unemployment rate edged down to 3.5%.

“This type of report shows underlying economic strength, and it gives corporate management confidence in the strength of the economy,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “Primarily because of (trade negotiations), there’s been a lot of uncertainty with management.”

Regarding trade, White House economic adviser Larry Kudlow said that while the Dec. 15 remains the date when the next round of tariffs on Chinese goods will take effect, “the reality is constructive talks, almost daily talks; we are, in fact, close.”

“You have two very tough negotiators and a lot of tough issues to be agreed on,” Ghriskey added. “But, based on what we’re hearing from serious sources, it certainly appears we will be seeing some kind of trade deal.”

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U.S. Treasury yields rose after the strong employment report, and bank stocks .SPXBK had their best day in over a month, rising 1.6%.

The Dow Jones Industrial Average .DJI rose 337.27 points, or 1.22%, to 28,015.06, the S&P 500 .SPX gained 28.48 points, or 0.91%, to 3,145.91 and the Nasdaq Composite .IXIC added 85.83 points, or 1%, to 8,656.53.

Of the 11 major sectors of the S&P 500, all but utilities .SPLRCU closed in positive territory, with energy .SPNY, financials .SPSY and trade-sensitive industrials .SPLRCI enjoying the largest percentage gains.

Energy stocks were buoyed by a 1.1% rise in crude prices CLc1 following an agreement between OPEC and its allies to extend output cuts through 2020.

Industrials had their best day in over a month, rising 1.3%.

Kudlow's comments also lifted tariff-vulnerable chip stocks, sending the Philadelphia Semiconductor index .SOX up 1.6%.

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Shares of cosmetics retailer Ulta Beauty Inc ULTA.O jumped 11.1%, the best performer in the S&P 500, after beating quarterly profit expectations.

Tesla Inc TSLA.O rose 1.7% after revealing it would receive state subsidies for its Chinese-built Model 3 cars.

3M Co MMM.N advanced 4.3% after Bloomberg reported the company was exploring a sale of its drug delivery systems business, which could fetch about $1 billion.

Advancing issues outnumbered declining ones on the NYSE by a 2.93-to-1 ratio; on Nasdaq, a 2.27-to-1 ratio favored advancers.

The S&P 500 posted 54 new 52-week highs and no new lows; the Nasdaq Composite recorded 124 new highs and 45 new lows.

Volume on U.S. exchanges was 6.64 billion shares, compared with the 6.65 billion-share average over the last 20 trading days.

Reporting by Stephen Culp; editing by Jonathan Oatis