US stocks notched their best day in a month on Friday, with the S&P 500 and NASDAQ closing at record highs after a second straight month of robust labor market data boosted optimism that economic growth is accelerating.
The US Department of Labor report showed that nonfarm payrolls rose by 255,000 last month, far outpacing expectations for a gain of 180,000.
While the unemployment rate remained unchanged at 4.9 percent, it held below the 5 percent mark associated with full employment.
The S&P 500 ended at 2,182.87, its eighth closing high of the year, powered by a 1.9 percent gain in financials, which would be primed for a profit boost should the US Federal Reserve raise interest rates.
JPMorgan Chase shares gained 2.7 percent to US$66.30 and the financial index closed at its highest level of the year.
“This is a flat out strong report; there don’t appear to be any holes whatsoever,” said Tom Porcelli, chief US economist at RBC Capital Markets in New York.
“But we need to temper enthusiasm, with two straight positive payroll reports everyone is going to shift to the other side of the boat — first the boat was sinking and now everyone is going to think the boat is going to take off,” he said.
Employment numbers were weak in April and May, and a surprisingly strong reading in June left investors unsure of the state of the economy. The June employment number was revised to 292,000 from 287,000.
The Fed may still wait for GDP growth to improve and inflation to move closer to its 2 percent target before pulling the trigger on an interest rate hike.
The probability of a hike doubled to 18 percent for next month after the jobs report and rose to about 46 percent for December, according to CME Group’s FedWatch tool.
The Dow Jones industrial average rose 1.04 percent to 18,543.53; the S&P 500 gained 0.86 percent to 2,182.87; and the NASDAQ Composite added 1.06 percent to 5,221.12.
The NASDAQ surpassed a record set in July last year.
For the week, the Dow rose 0.6 percent, the S&P 500 gained 0.4 percent and the NASDAQ advanced 1.1 percent.
Bristol-Myers plunged 16 percent after its lung cancer drug failed in a late-stage study, while Merck, which makes a rival drug, rose 10.4 percent.
Bristol-Myers was the biggest drag on the S&P 500, while Merck gave the benchmark index its biggest boost.
Kraft Heinz, the company behind Oscar Mayer bologna, Jell-O pudding and Velveeta cheese, also traded higher after it reported a larger profit than analysts expected. Its stock rose 3.8 percent.
Security software maker FireEye tumbled 12.1 percent after it reported weak sales, cut its forecasts and announced job cuts. Rival software firm Symantec disclosed a larger profit and better sales than expected in its fiscal first quarter, and its full-year profit forecast was stronger than expected. Its stock climbed 4.1 percent.
Advancing issues outnumbered declining ones on the NYSE by a 2.64-to-1 ratio; on NASDAQ, a 2.57-to-1 ratio favored advancers.
About 6.77 billion shares changed hands in US exchanges, compared with the 6.58 billion daily average over the past 20 sessions.
Additional reporting by AP
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