Upbeat Jobs Data Leads To New Record Highs On Wall Street

With traders reacting positively to the closely watched monthly jobs report, stocks showed a strong move to the upside over the course of the trading day on Friday. The advance lifted all three major averages to new record closing highs.

The major averages reached new highs going into the close of trading. The Dow rose 152.82 points or 0.4 percent to 34,786.35, the Nasdaq advanced 116.95 points or 0.8 percent to 14,639.33 and the S&P 500 climbed 32.40 points or 0.8 percent to 4,352.34.

For the week, the Nasdaq spiked by 2 percent, the S&P 500 surged up by 1.7 percent and the Dow jumped by 1.1 percent.

The strength on Wall Street came after the Labor Department released a report showing a continued reacceleration in the pace of U.S. job growth in the month of June.

The report showed non-farm payroll employment spiked by 850,000 jobs in June after surging by an upwardly revised 583,000 jobs in May.

Economists had expected employment to jump by about 700,000 jobs compared to the addition of 559,000 jobs originally reported for the previous month.

Following the decrease in employment seen last December, the pace of job growth has bounced back to its highest level since last August.

Meanwhile, the Labor Department said the unemployment rate unexpectedly inched up to 5.9 percent in June from 5.8 percent in May. The unemployment rate was expected to edge down to 5.7 percent.

The stronger than expected job growth paints a positive picture of the gradually reopening economy but is not seen as likely to significantly alter the Federal Reserve’s timeline for tightening monetary policy.

“With further progress toward the Fed’s dual mandate likely over the summer, we anticipate a Fed tapering announcement at the Jackson Hole Symposium in August,” said Lydia Boussour, Lead US Economist at Oxford Economics

She added, “Still, while tapering would start in early 2022, rate liftoff wouldn’t be on the table until early 2023.”

A separate report from the Commerce Department showed the U.S. trade deficit widened roughly in line with estimates in the month of May.

Sector News

Software stocks showed a significant move to the upside over the course of the session, driving the Dow Jones U.S. Software Index up by 1.8 percent to a record closing high.

Considerable strength also emerged among gold stocks, resulting in a 1.5 percent advance by the NYSE Arca Gold Bugs Index.

The strength in the gold sector came amid an increase by the price of the precious metal, as gold for August delivery climbed $6.50 to $1,783.30 an ounce.

Telecom and retail stocks also moved notably higher, with the NYSE Arca North American Telecom Index and the Dow Jones U.S. Retail Index rising by 1.4 percent and 1.2 percent, respectively.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index rose by 0.3 percent, while China’s Shanghai Composite Index plunged by 2 percent.

The major European markets also ended the day mixed. While the German DAX Index climbed by 0.3 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index both closed slightly below the unchanged line.

In the bond market, treasuries rebounded from the pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.9 basis points to a four-month closing low of 1.431 percent.

Looking Ahead

Following the long holiday weekend, next week’s trading may be impacted by reaction to the minutes of the latest Fed meeting.

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