Wall Street scaled new highs on Friday, with the S&P closing up for a seventh straight day, after jobs data for last month showed robust hiring yet persistent weakness in the labor market that would keep the US Federal Reserve from raising interest rates any time soon.
The three major US indices — the S&P, Dow and the NASDAQ — closed at record highs. The streak was the longest run of consecutive record closes since June 1997, according to S&P Dow Jones Indices.
The US Department of Labor’s employment report showed that nonfarm payrolls increased by 850,000 jobs last month, but the total is 6.8 million below the peak in February last year.
The better-than-expected data was a tentative sign that a labor shortage overhanging the US economy is starting to ease, but was not enough to force the Fed to raise rates.
Big tech led stocks on Wall Street higher, while the yield on the benchmark 10-year US Treasury note slid to 1.431 percent.
“For capital markets, equities and bonds, this was a Goldilocks report,” Wells Fargo Wealth & Investment Management chief investment officer Darrell Cronk said. “There were enough jobs that you’d want to see, but not so much that it concerns people that the Fed may have to act sooner.”
Investors have feared a better-than-expected recovery and the prospect of surging inflation that could force the Fed to pare its support and raise rates, hurting technology shares whose growth and cash flow are farther in the future.
Microsoft Corp added the most to the S&P’s broad advance, followed by Apple Inc, Amazon.com Inc and Google parent Alphabet Inc. Financial stocks, which earn less on lower rates, fell, as did utilities.
The Dow Jones Industrial Average rose 152.82 points, or 0.44 percent, to 34,786.35, the S&P 500 gained 32.4 points, or 0.75 percent, to 4,352.34 and the NASDAQ Composite added 116.95 points, or 0.81 percent, to 14,639.33.
For the week, the S&P rose 1.67 percent, the Dow added 1.02 percent, the NASDAQ gained 1.94 percent.
Trading was light heading into the long weekend, with US markets shut tomorrow in observance of Independence Day. Volume on US exchanges was 7.95 billion shares, compared with the 10.81 billion average for a full session over the past 20 trading days.
Headwinds that have weighed on hiring, including jobless benefits and vaccine concerns, are likely to diminish in the fall and might help jobs growth accelerate, Ameriprise Financial Inc chief market strategist David Joy said.
“But for now, the recovery in the labor market is not so robust as to bring forward any further the Fed’s eventual tightening,” Joy said.
The report served as evidence of the economy’s ongoing recovery, US Bank Wealth Management senior investment director Bill Northey said.
“Some of the most impaired corners of the US economy, namely retail, leisure and hospitality, showed some of the strongest improvements,” Northey said.
Focus now shifts toward the second-quarter earnings season and progress on US President Joe Biden’s infrastructure bill that could help the equity market maintain momentum.
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