Stocks rally on Wall Street; job market remains strong

A currency trader watches computer monitors near the screens showing the foreign exchange rate between U.S. dollar and South Korean won at a foreign exchange dealing room in Seoul, South Korea, Wednesday, Dec. 28, 2022. Shares were mixed in Asia on Wednesday after a post-holiday retreat on Wall Street, as markets count down to the end of a painful year for investors.(AP Photo/Lee Jin-man)

A currency trader walks by the screen showing the Korea Composite Stock Price Index (KOSPI) at a foreign exchange dealing room in Seoul, South Korea, Wednesday, Dec. 28, 2022. Shares were mixed in Asia on Wednesday after a post-holiday retreat on Wall Street, as markets count down to the end of a painful year for investors.(AP Photo/Lee Jin-man)

A currency trader talks on the phone near the screens showing the Korea Composite Stock Price Index (KOSPI), center, and the foreign exchange rate between U.S. dollar and South Korean won at a foreign exchange dealing room in Seoul, South Korea, Wednesday, Dec. 28, 2022. Shares were mixed in Asia on Wednesday after a post-holiday retreat on Wall Street, as markets count down to the end of a painful year for investors.(AP Photo/Lee Jin-man)

A currency trader talks on the phone near the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at a foreign exchange dealing room in Seoul, South Korea, Wednesday, Dec. 28, 2022. Shares were mixed in Asia on Wednesday after a post-holiday retreat on Wall Street, as markets count down to the end of a painful year for investors.(AP Photo/Lee Jin-man)

People walk past the New York Stock Exchange on Wednesday, June 29, 2022 in New York. Stocks are opening lower across the board on Wall Street, Tuesday, July 5, and crude oil prices are dropping again. Treasury yields also fell as traders continued to worry about the state of the economy (AP Photo/Julia Nikhinson)

Currency traders stand near the screens showing the foreign exchange rates at a foreign exchange dealing room in Seoul, South Korea, Thursday, Dec. 29, 2022. Shares slipped in Asia on Thursday after benchmarks fell more than 1% on Wall Street in the middle of a mostly quiet and holiday-shortened week. (AP Photo/Lee Jin-man)

A currency trader walks by the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at a foreign exchange dealing room in Seoul, South Korea, Thursday, Dec. 29, 2022. Shares slipped in Asia on Thursday after benchmarks fell more than 1% on Wall Street in the middle of a mostly quiet and holiday-shortened week. (AP Photo/Lee Jin-man)

A currency trader walks by the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at a foreign exchange dealing room in Seoul, South Korea, Thursday, Dec. 29, 2022. Shares slipped in Asia on Thursday after benchmarks fell more than 1% on Wall Street in the middle of a mostly quiet and holiday-shortened week. (AP Photo/Lee Jin-man)

A currency trader walks by the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at a foreign exchange dealing room in Seoul, South Korea, Thursday, Dec. 29, 2022. Shares slipped in Asia on Thursday after benchmarks fell more than 1% on Wall Street in the middle of a mostly quiet and holiday-shortened week. (AP Photo/Lee Jin-man)

An NYSE sign is displayed at the New York Stock Exchange in New York, on Nov. 28, 2022. Stocks edged higher in morning trading on Wall Street Wednesday, Dec. 28, 2022, as investors count down to the end of the worst year for the S&P 500 since 2008. (AP Photo/Seth Wenig, File)

The New York Stock Exchange is seen in New York, Tuesday, June 14, 2022. (AP Photo/Seth Wenig, File)

A screen displays financial news on the floor at the New York Stock Exchange in New York, Thursday, Dec. 29, 2022. Stocks are opening higher on Wall Street Thursday in a broad rally led by the IT and communications sectors. (AP Photo/Seth Wenig)

A Trader works on the floor at the New York Stock Exchange in New York, Thursday, Dec. 29, 2022. Stocks are opening higher on Wall Street Thursday in a broad rally led by the IT and communications sectors. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Thursday, Dec. 29, 2022. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Thursday, Dec. 29, 2022. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Thursday, Dec. 29, 2022. Stocks are opening higher on Wall Street Thursday in a broad rally led by the IT and communications sectors. (AP Photo/Seth Wenig)

A screen displays financial news on the floor at the New York Stock Exchange in New York, Thursday, Dec. 29, 2022. Stocks are opening higher on Wall Street Thursday in a broad rally led by the IT and communications sectors. (AP Photo/Seth Wenig)

Stocks rallied on Wall Street in afternoon trading Thursday as investors reviewed the latest government update showing that the labor market remains strong.

The S&P 500 rose 1.8% as of 1:46 p.m. Eastern. More than 95% of stocks within the benchmark index gained ground. It's the latest oscillation in what has been a volatile, holiday-shortened week for stocks.

The Dow Jones Industrial Average rose 376 points, or 1.1%, to 33,250 and the Nasdaq rose 2.6%.

Tesla jumped 5.6% as it continued to recover from steep losses Tuesday following reports it temporarily suspended production at a factory in Shanghai. The stock is still down 66% for the year.

Investors have been hoping for a “Santa Claus” rally. That’s Wall Street’s term for when stocks rise in the last five trading days of December and first two of January. Even a late rally likely wouldn't change the broader market's trajectory for the month.

Every major index is headed for a loss in December that will cap off a dismal year. While companies in the S&P 500 raked in record profits this year, investors in the benchmark index will see a roughly 20% loss in 2022, which would mark its worst year since 2008.

Treasury yields were mixed. The yield on the 10-year Treasury fell to 3.83% from 3.89% late Wednesday.

Markets in Europe were higher and markets in Asia slipped.

Investors have been focused on the Federal Reserve's continuing fight against stubbornly hot inflation. The central bank has been raising interest rates in an effort to stifle borrowing and spending and cool inflation, but the strategy risks going too far and sending the economy into a recession. That has put an even greater focus on a wide range of data for Wall Street as it tries to determine whether inflation is cooling and how various areas of the economy are faring.

The latest update from the U.S. shows that the number of people seeking unemployment benefits rose only slightly last week. The labor market has been one of the stronger areas of the economy. That's normally good news and it has helped create a bulwark against a recession as other areas of the economy slow. It has also made the Fed's fight against inflation more difficult and means the central bank will have to likely remain aggressive, raising the risk that its policy could bring on a recession.

The Fed has already raised its key interest rate seven times this year and is expected to continue raising rates in 2023. The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers forecast that the rate will reach a range of 5% to 5.25% by the end of 2023. Their forecast doesn’t call for a rate cut before 2024.