NEW YORK (TheStreet) -- The all-important August jobs report is less than 24 hours away and markets were rallying as investors prepared to glean what the labor market situation might mean for the Federal Reserve's rate hike timeline.
Markets were already buoyant Thursday after European Central Bank President Mario Draghi struck a dovish tone and showed willingness for further quantitative easing to jump-start the economy. Wall Street appeared calmer after a wild start to the week as China's markets were closed Thursday and Friday to commemorate World War II.
The S&P 500 was up 0.85%, the Dow Jones Industrial Average added 0.79%, and the Nasdaq gained 0.66%.
The jobs report for August, to be released on Friday, will be crucial to any decision in September on interest rates. Economists expect 223,000 jobs to have been added to nonfarm payrolls in the U.S. over the month compared to 215,000 jobs added in July. The unemployment rate is forecast to fall to 5.2% from 5.3%.
Investors have shown nerves recently that the Fed will raise rates in September given the strength of the U.S. economy even as the global economy falters. Fed members will meet on Sept. 16-17. The market-implied probability of a rate hike has fallen below 50% even as economic data continues to support a U.S. recovery.
Weekly jobless claims rose 12,000 to 282,000 in the week ended Aug. 29, the highest level in two months. Economists had expected new claims to climb to 271,000. Claims for unemployment benefits remained under the 300,000 level, extending the longest streak since 2000.
The ISM non-manufacturing index hit 59 in August, down from 60.3 in July but better than an expected reading of 58.1. Markit's recent services sector reading showed a similar trend with a reading of 56.1 above forecasts of 55.2.
The U.S. trade deficit fell 7.4% in July to $41.9 billion as the country imported fewer tech products and pharmaceutical goods. Exports increased 0.4% to $188.5 billion, their first increase in three months. Economists had expected a deficit of $41.8 billion.
Draghi suggested in a press conference that the ECB was ready to take further monetary action if inflation continued to slow. He also noted that the ECB was ready to "fully implement" its asset-buying program which would run to Sept. 16 or longer if needed. The ECB will increase the percentage of any single issue of bonds in its asset-buying program to 33% from 25%.
The European body also reduced inflation forecasts with 2015 inflation expected at just 0.1%, down from a June forecast of 0.3%. Next year, the ECB expects inflation of 1.1%, down from 1.5%.
The European Central Bank left rates unchanged with the refinancing rate at 0.05%, as expected.
"This is a very dovish (downbeat) assessment of the economy," said Matt Weller, senior technical analyst at FOREX.com. "In particular, the decision to increase the share repurchase limit suggests that the central bank would like to increase its purchases in certain types of assets, a possible precursor to expanding or extending its quantitative-easing program in the future."
China's markets were closed to commemorate the 70th anniversary of the end of World War II, but their impact on global markets appeared to be in focus after the International Monetary Fund warned of further trouble ahead.
"China's transition to a lower growth, while broadly in line with forecasts, appears to have larger-than-previously-envisaged cross-border repercussions, reflected in weakening commodity prices and stock prices," the IMF said. "Near-term downside risks for emerging economies have increased."
The search for a permanent CEO of Twitter (TWTR - Get Report) heated up on Thursday as the board prepares to meet to discuss the situation. Co-founder and interim CEO Jack Dorsey remains the leading candidate, according to Bloomberg, even though he is still CEO of Square, which is set to go public. Twitter shares added nearly 3%.
eBay (EBAY - Get Report) was upgraded to "neutral" from "underweight" at Piper Jaffray. Analysts said the move was a valuation call to reflect a $30 price target following the completion of the PayPal spinoff. Shares added 1.9%.
Campbell Soup (CPB - Get Report) shares were on watch after the company earned 43 cents a share in its fourth quarter, a penny above estimates, while organic sales rose 1%. The better-than-expected results were due to higher pricing.
Joy Global (JOY - Get Report) fell 7% after missing profit and sales estimates in its third quarter. The mining machinery company earned 54 cents a share, 7 cents below expectations, while revenue fell nearly 10% to $792 million. Joy Global also cut full-year earnings guidance to $1.80 a share, down from $2.50 to $3.
Five Below (FIVE) dropped 9% despite an in-line second quarter. The department store earned 13 cents a share, as expected, while comparable-store sales jumped 3% and revenue climbed nearly 20%.
Planet Fitness (PLNT) climbed 1.4% after reporting 26% jump in profit in its first financial report since its initial public offering in August. Earnings of 13 cents beat by a penny, while revenue jumped 26% to $78.95 million.