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US Markets post solid gains on strong jobs report, possible Korea talks

A strong jobs report and a pledge by President Donald Trump to break with longstanding precedent and meet with North Korea's leader sent stocks to their highest levels in weeks.

The S&P 500 Index closed up 1.74% to 2,786.57 on March 9, edging toward its record high of 2,872.87 set on Jan. 26. The Nasdaq Composite Index also finished strong, up 1.79% at 7,560.81.

Bonds sold off as February job numbers came in better than expected at 313,000, practically ensuring a March rate hike from the Federal Reserve. Yields on the benchmark 10-year U.S. Treasury were up to 2.890%. Bond prices fall as yields rise.

Though wage growth was disappointing, S&P Global U.S. Chief Economist Beth Ann Bovino said in a note that three rate increases in 2018 seem likely, "though we wouldn't be surprised if the Fed adds a fourth rate hike before year-end."

Good news on the employment front came after a surprise announcement March 8 that Trump had accepted an invitation to meet with North Korean leader Kim Jong-un, possibly as early as May, according to the South Korean diplomat who relayed the invitation.

If the meeting were to take place, it would be the first time a sitting U.S. President met with the head of the North Korean government.

White House officials later attempted to soften expectations about a meeting. Press Secretary Sarah Huckabee Sanders told reporters March 9 that "this meeting won't take place without concrete actions that match the promises that have been made," presumably meaning that North Korea would abandon its nuclear weapons program.

Of more immediate concern to continued economic growth was the fact that the Trump administration also ended up soft-pedaling its tariffs on imported steel and aluminum. Though still set at 25% and 10%, respectively, Canada and Mexico received temporary exemptions, at least while North American Free Trade Agreement renegotiations are underway.

Other countries were also invited to discuss potential exemptions from the tariffs.

The more flexible approach eased fears of global trade wars. With the Fed and other central banks on the path toward normalizing monetary policy, a rise in prices and a slowdown in output could be just about the worst-case scenario for continued economic expansion.