By David Hodari and Corrie Driebusch

*US Stock-Gains Accelerate in Afternoon Trading

*DJIA Now Up 820 Points (3.6%)

*S&P 500 Climbs 3.6%; Nasdaq Composite Rises 4.4%

(Article below will update)

U.S. stocks rose sharply Friday, bouncing back from their worst two-day start to a year since 2000, after a strong jobs report and signs that the Federal Reserve will be flexible with its interest-rate policy.

Stocks rose, lifting major indexes into positive territory for the week, as the better-than-expected hiring in December suggested a healthier U.S. economy than some investors and economists anticipated after waves of volatility swept through stock and bond markets in recent weeks amid fears of slowing growth around the world.

Federal Reserve Chairman Jerome Powell‘s commentary in Atlanta also boosted investor enthusiasm for stocks. Mr. Powell said in his remarks that U.S. data seems to be on track to sustain good momentum into the new year, but that he is watching financial markets and is “prepared to adjust policy quickly and flexibly” if necessary.

Investors took note of the comments in part due to their timing, hours after a fresh jobs report and following developments this week that stoked fears about slowing economic growth. Traders in Stifel Nicolaus‘ Baltimore office plugged in their headphones Friday morning to listen to Chairman Powell‘s commentary for clues about the path of Fed policy. In the weeks leading up to corporate results, remarks from the Fed and economic data are what traders and investors say they are focusing most on.

Chairman Powell appears to be “more open to listening to what the market is telling him rather than just the data is telling him,” said Justin Wiggs, Stifel‘s managing director in equity trading. That‘s a good thing for stock investors, he added.

The Dow Jones Industrial Average rose more than 700 points, or 3.2%, in recent trading. The S&P 500 and the Nasdaq Composite gained 3.3% and 4.1%, respectively. Major indexes were led higher by tech companies and stocks most heavily exposed to the Chinese economy, such as Caterpillar, after China confirmed a two-day meeting with U.S. representatives to work to resolve the countries‘ trade dispute. All three indexes were set to end the week more than 1% higher.

The yield on 10-year U.S. Treasurys, meanwhile, was last up to 2.659% from 2.557% late Thursday. Yields rise as prices fall.

U.S. nonfarm payrolls increased a seasonally adjusted 312,000 in December, the Labor Department said Friday, the biggest jump since February. Average hourly earnings rose a seasonally adjusted 0.4% from November and 3.2% from December 2017, the best full-year gain since 2008.

Every month, investors parse jobs reports for clues on the health of the U.S. economy and for their significance to Federal Reserve monetary policy, which has given investors cause for concern in recent months. Economists polled by The Wall Street Journal forecast the addition of 176,000 jobs to the U.S. economy in December.

“These numbers are not consistent with a recession in 2019,” said Darrell Cronk, chief investment officer for wealth and investment management at Wells Fargo & Co. He added that while he expects global growth and U.S. economic growth to slow this year, he believes many investors have become too pessimistic.

Since late September, the S&P 500 has fallen more than 16% through Thursday‘s close, while the Nasdaq Composite was off more than 20% from its late-August high. Weak manufacturing data and a sales warning from Apple Inc. shook the markets on Thursday, sending the Dow industrials down more than 650 points.

Oil prices climbed toward their fifth consecutive session of gains following production cuts from the Organization of the Petroleum Exporting Countries and its allies. U.S.-traded crude oil on Friday rose 1.8% to $47.96 a barrel.

Stock markets also rallied in Asia, where the Shanghai Composite Index, the Shenzhen A-Share and the Hang Seng all rose more than 2%. Japan‘s Nikkei returned to trading after a public holiday to drop 2.3% in a delayed reaction to losses across global markets earlier in the week.

Around the globe stocks also rose, while haven assets also reversed their moves from earlier in the week. China-exposed equities outperformed in Europe. The broader Stoxx Europe 600 index climbed 2.8%, also buoyed by its energy constituents, which rose partly on the continuing resurgence in energy prices.

Markets rallied after China‘s commerce ministry said that a U.S. trade delegation led by Deputy Trade Representative Jeffrey Gerrish will visit China on Monday and Tuesday. Equities markets also showed some relief after House Democrats passed a spending package aimed at reopening the federal government, even though adoption by the Senate appeared unlikely.

Upbeat data from a private gauge of China‘s services sector, as well as a move by the People‘s Bank of China to support growth by lowering banks‘ reserve-requirement ratio, also supported Asian markets.

Write to David Hodari at David.Hodari and Corrie Driebusch at corrie.driebusch