Dow Jones, S&P 500, Nasdaq build on Friday rally as investors ...

12:07pm: Jobs report "ticked every box," analyst says

At midday, the Dow was up 242 points, 0.7%, to 33,873, the Nasdaq Composite added 222 points, 2.1%, to 10,792 and the S&P 500 improved 49 points, 1.3%, to 3,944.

The benchmarks picked up where they left off Friday as investors react to jobs data released last week. 

"Last week's jobs report ticked every box," said Craig Erlam, senior market analyst, UK & EMEA, at OANDA . "Jobs growth was good but not too much, participation improved, wage growth moderated and revisions to the November data eradicated any fears that the report initially triggered. It couldn't have gone much better.'

9.35am: Rally continues as retailers warn of holiday sales slump

US stocks opened higher on Monday extending last week’s rally. Just after the market opened, the Dow Jones Industrial Average had added 162 points or 0.5% at 33,793 points, the S&P 500 was up 25 points or 0.6% at 3,920 points, and the Nasdaq Composite had gained 111 points or 1% at 10,5673 points.

In terms of major movers, shares of meme stock Bed Bath & Beyond Inc rose 17.2% without the company posting any news. The embattled retailer warned recently that it could go bankrupt.

Fellow retailers Macy’s Inc and Lululemon Athletica Inc fell 6.7% and 11.4% respectively after both companies posted grim revenue and profit warnings as inflation impacted holiday sales.

On the flip side, US-listed shares of Alibaba Group Holding Limited added 3.3% after it was revealed that the founder of its affiliate company Ant Group Jack Ma would be stepping down amid a broader overhaul of the Chinese fintech company.

6.30am: Attention turns to inflation data this week 

Wall Street is expected to open higher after employment and other economic data on Friday opened the way for the Federal Reserve to ease back on interest rate hikes and as traders look to latest inflation data and the start of earnings season for further direction. 

Futures for the Dow Jones Industrial Average (DJIA) rose 0.3% in Monday pre-market trading, while those for the broader S&P 500 index gained 0.4% and contracts for the Nasdaq-100 added 0.3%.

Non-farm payrolls data for December published Friday came in ahead of expectations but wage growth slowed to 4.6% year-over-year (y/y) from 5% a month earlier, indicating softening inflationary pressure.

Stocks ended the week in the green, with the S&P 500 closing 2.8% higher at 3,895, the Nasdaq Composite up 2.6% at 10,569, and the DJIA rounding out the pack with a gain of 2.1% to close at 33,631. 

“If Friday’s price action tells us anything it’s that investors really want to believe the peak inflation narrative that has helped support the rebound in equity markets that we’ve seen so far this year,” said Michael Hewson, chief market analyst at CMC Markets UK. “The December payrolls report was at best a goldilocks report with something for everyone, bull and bear alike, with the wider question being as to what it is actually telling us about the wider US economy.”

The positive news continued with a services PMI which dipped into contractionary territory, lending further weight to hopes of a soft landing for the economy, with expectations for an interest rate rise of 0.25% in February now in pole position, commented Richard Hunter, head of markets at interactive investor. 

“The consumer price index (CPI) number due on Thursday now takes on additional significance, with forecasts suggesting a further slowdown in both headline and core inflation numbers,” Hunter added.

The Bureau of Labor Statistics releases December’s inflation data on Thursday, with CPI expected to have eased to around 6.5% y/y from 7.1% in November.

“This week also marks the start of the earnings season, with proceedings being opened by the likes of Bank of America, Citigroup and JP Morgan,” Hunter continued. “The consensus is that the banks will have shown little to no year-on-year growth and, in more general terms, earnings are expected to have fallen across the board in the face of margin compression resulting from the inflationary backdrop.”