U.S. stocks closed higher Friday after employment data showed wage growth decelerated last month and a separate report suggested a contraction in the services industry, both signaling a slowing economy.

The Dow Jones Industrial Average rose 699.71 points, or 2.12%, to close at 33,629.79. The S&P 500 advanced 86.90 points, or 2.28%, to close at 3,895.00 and the Nasdaq Composite Index jumped 264.05 points, or 2.56%, to close at 10,569.29.

The two reports fueled hope that the Federal Reserve would pull back in 2023 from its aggressive rate hikes in 2022 to fight inflation.

In particular, the Labor Department reported average hourly earnings rising at 0.3%, down from a revised 0.4% increase in November. On an annual basis, wages rose 4.6% in December, a slower pace than the 4.8% seen during the prior month.

Meanwhile, shares of World Wrestling Entertainment (WWE) soared Friday after company founder Vince McMahon announced his return to the company as a director. Share price of the company surged 16.81%, or $12.11 a share to close at $84.15.

Some stocks that rose Friday included Apple (AAPL), which closed at $129.62, up $4.60, or 3.68%. Amazon (AMZN) shares rose 3.56%, or $2.96 a share, to close at $86.08.

"Indeed, expectations for a soft landing in the economy have likely been boosted in light of today's jobs report — yet, with the unemployment rate back to the historic low of 3.5%, how realistic is it to expect wage growth to move meaningfully lower?" Principal Asset Management Chief Global Strategist Seema Shah told Yahoo Finance.