By Katanga Johnson

WASHINGTON (Reuters) – Global stocks rallied on Friday and closed near all-time highs, and oil and gold rose while the dollar dropped after U.S. jobs data was strong but not as robust as expected, easing investor worries that the Federal Reserve would soon rein in monetary stimulus.

U.S. employers increased hiring in May and raised wages. But the nonfarm payrolls increase of 559,000 jobs landed below the 650,000 forecast of economists polled by Reuters.

The pan-European STOXX 600 index rose 0.39% after hitting a record high this week. MSCI’s all-country world index, which tracks shares in 50 countries across the globe, gained 0.71%.

A stronger-than-expected jobs report would have heightened worries that the Fed might contemplate paring back its bond-buying program and raising interest rates.

“This lower payrolls number should keep investor concerns about inflation muted – as long as the job market remains depressed, it’s hard to see wage inflation jumping higher,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

Zaccarelli added that there may be some lingering concerns about overall price inflation as the Fed keeps rates lower for longer amid unprecedented fiscal stimulus.

Market whispers had been for a stronger number, analysts said. U.S. Labor Secretary Marty Walsh in an interview with CNBC welcomed a “good, solid” jobs report and predicted more Americans would get back to work in coming months as more are vaccinated.

On Wall Street, Microsoft lifted the S&P 500, followed by Apple, as the index gained 37.04 points, or 0.88%, to 4,229.89, marking an overall near-record jump of more than 12% this year. Those technology firms account for more than 5% of the MSCI’s all-country index’s weight.

Shares for Amazon.com Inc, Facebook, Alphabet’s Google and Tesla also were up.

The Dow Jones Industrial Average rose 179.35 points, or 0.52%, to 34,756.39 while the Nasdaq Composite added 199.98 points, or 1.47%, to 13,814.49.

So-called “meme stocks” continued their wild ride, with AMC Entertainment Holdings shares little changed but on track to nearly double for the week.

Analysts said investors were watching progress for proposed U.S. infrastructure spending. President Joe Biden rejected a new proposal from Republican Senator Shelley Moore Capito, the White House said. They were scheduled to meet on Monday.

Benchmark 10-year notes last rose 20/32 in price to yield 1.5585%, from 1.627%, while euro zone bond yields edged lower as investors wondered about Fed policy.

Oil rose, with Brent topping $72 a barrel for the first time since 2019 on as OPEC+ supply discipline and recovering demand.

The dollar index fell 0.39%, with the euro up 0.36% to $1.2168. Strategists in a Reuters poll were almost evenly split on the dollar’s near-term direction.

New orders for U.S.-made goods fell more than expected in April as a global semiconductor shortage weighed on production of motor vehicles and electrical equipment, appliances and components.

Graphic: Stock market loves the U.S. jobs picture – https://fingfx.thomsonreuters.com/gfx/mkt/qmypmzajxvr/Pasted%20image%201622814084449.png

TAPER TALK

Investors have been parsing economic data to gauge whether inflation could force the Fed to change course.

“Will prolonged, low-wage inflation allow for a longer period of low, overall price inflation to reign? Or will a Fed that is slow to raise rates – because they are concerned about a weak labor market – create a higher-than-expected overall inflation regime?” said Independent Advisor Alliance’s Zaccarelli.

Spot gold added 1.1% to $1,890.65 an ounce after a 2% tumble on Thursday, its biggest since February.

(Reporting by Katanga Johnson in Washington; editing by Jonathan Oatis and David Gregorio)

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