Shares related to the economic recovery rose after a stronger-than-expected job report on Friday, which brought two key market averages to all-time highs.
The Dow Jones Industrial Average rose 155 points, or 0.4%, and reached a record within a day. The S&P 500 rose 0.2% for its own daily index, while the technologically heavy Nasdaq Composite fell 0.2%.
Business report for Friday showed that the U.S. economy added 943,000 jobs in July, according to the Department of Labor. Economists expected the economy to add 845,000 jobs last month, according to Dow Jones estimates. The unemployment rate fell to 5.4%, below the 5.7% estimate.
Bank stocks topped earnings reports after rates rose, increasing their profitability outlook. JPMorgan, Bank of America and Wells Fargo all earned more than 1% in early trading. Industry, retailers and energy stocks also benefited as the job report eased concerns about the economy’s return.
Technology stocks, on the other hand, have fallen as interest rate spikes have forced investors to take profits in their own names and return to stocks that could benefit more from faster economic growth. Amazon, Apple and Salesforce traded slightly in early trading. Higher rates may also expose high inventory estimates.
Defense supplies, such as utilities and health companies, also declined after the report.
“I think these are really, really good numbers for the stock market. It’s just one number, they’re unstable, you have to take it with a grain of salt. … And what does this do more than anything if it causes a big shift in the leadership of this stock market,” he said. is James Paulsen, chief investment strategist for The Leuthold Group, at CNBCSquawk Box. “
“S&P isn’t doing much, but the feat here has shifted to cyclical and small, perhaps even international markets to some extent, those more sensitive to the economy, and away from growth and defense stocks, which have been leading for some time. Here,” Paulsen added. .
The report from Friday comes after the weekly initial number of claims reported on Thursday came on 385,000, which was in line with expectations. However, ADP’s report on private payrolls on Wednesday showed fewer jobs than expected added during July.
Wall Street is closely monitoring the employment report on Friday given its potential to influence Federal Reserve policy in the future. Fed Governor Christopher Waller told CNBC on Monday that he would push for the central bank to reduce asset purchases if the next two business reports show a healthy recovery.
“This is a strong report. It will really reinforce the view that the Fed is not far from giving advance notice of the declining announcement,” James McCann, deputy chief economist for Aberdeen Standard Investments, said in a note. “Powell might have taken advantage of a meeting of central bank policy makers in Jackson Hole later this month to provide additional clues, but he made it clear that these business reports are a cornerstone in the Fed’s thinking about tightening policy.”
The Jobs Report also created trends in the bond market. The 10-year treasury yield continued a recent series of volatile trades, jumping to 1.27% after the report. The reference yield traded 1.13% earlier this week. Yields are the opposite of prices.
Stocks are over Session on Thursday in green, with the S&P 500 up 0.6% and closing at a new record. The Dow earned 271.58 points or 0.78%. The Nasdaq Composite also advanced 0.78% for its fourth consecutive positive session.
The earnings work week continued on Friday with several significant reports, including Canopy growth,, AMC Networks,, Drafts,, Norwegian Cruise Line i Goodyear tire. In addition, Berkshire Hathaway is on deck on Saturday morning.
By Thursday afternoon, 427 components of the S&P 500 had released quarterly results, with 88% of the highest earnings estimates, according to data from Refinitive. In terms of revenue, 87% exceeded expectations.
During the week, the Dow rose 0.4%. S&P and Nasdaq rose 0.77% and 1.5%, respectively.
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