Stocks

S&P 500, Nasdaq trades at records after jobs report shows 850,000 added to June payrolls

U.S. stock benchmarks mostly gained early Friday, heading into a long holiday weekend, after a monthly report on the labor market came in better than expected on headline employment, as the economy bounces back from COVID.

Investors are attentive to the jobs figures because the labor-market recovery has been uneven in the rebound from the deadly pandemic, despite a record number of job openings.

The U.S. bond market will close an hour early Friday and U.S. markets will remain closed on Monday in observance of the Independence Day or Fourth of July holiday which falls on a Sunday this year.

How are benchmarks trading?
  • The Dow Jones Industrial Average
    DJIA,
    +0.14%

    were trading over 60 points higher at 34,694, a gain of 0.2%. The blue-chip gauges was seeing its gains kept in check after a report about a water land by a Boeing Co.
    BA,
    -1.22%

    cargo jet, according to a report.

  • The S&P 500 index
    SPX,
    +0.33%

    was up 11 points, or 0.3%, at 4,330.32, after establishing an intraday record high at 4,332.35.

  • The Nasdaq Composite Index
    COMP,
    +0.31%

    traded 63 points at 14,584, a rise of 0.4%. It set an intraday all-time high at 14,607.18 near Friday’s open.

On Thursday, the S&P 500 marked its sixth record close in succession and its 34th of 2021, advancing 22.44 points, or 0.5%, ending at 4,319.94; the Dow rose 131.02 points, or 0.4%, to close at 34,633.53, within striking distance of its record close at 34,777.76 hit on May 7. The Nasdaq Composite gained 18.42 points, or 0.1%, finishing at 14,522.38.

For the week

The Dow was looking at a weekly gain of 0.7% to mark its second straight weekly rise; the S&P 500 is up 1.2% also on track for its second consecutive weekly climb; and the Nasdaq Composite was on track for a gain of 1.7%, for its second straight weekly gain, as of Thursday’s close.

What’s driving the stock market?

The U.S. added 850,000 jobs in June, marking the biggest monthly gain since March, and jobs gains in May were raised slightly to 583,0000 from 559,000. Economists polled by The Wall Street Journal had estimated that the U.S. added 706,000 new jobs for June.

However, unemployment rose to 5.9% from 5.8%. The share of unemployed people was expected to decline to 5.6% from 5.8%.

U.S. average hourly earnings climbed 10 cents in June to $30.40, and U.S. workweek fell 0.1 hours to 34.7 hours last month.

Investors have been focused on jobs because despite evidence that inflation is heating up in the recovery from the pandemic, the jobs recovery hasn’t instilled confidence in market participants.

The number of people quitting their jobs recently has hit a record. There is also been a big flush of retirements among older people who don’t want to risk their health.

“Whilst we know the Fed has signalled it’s not ignorant about inflation risks, we also know that the labour market is a key factor in determining the likely timing and pace of tightening when it does happen,” wrote Neil Wilson, chief market analyst at Markets.com.

The labor-force participation rate, reflecting the share of able-bodied people 16 or older who were in the labor force, stood at 61.6% in May—the same as it was last October.

“The U.S. economy has added some 14 million jobs since the labor market bottomed out in April of last year, but employment in May 2021 was still some 7.5 million below its pre-pandemic level,” said chief economist Gus Faucher of PNC Financial Services.

The jobs report came after weekly data on Thursday showed that U.S. unemployment benefit claims sank to pandemic low of 364,000 as extra benefits start to get phased out.

“Payrolls growth came in ahead of expectations, with both the unemployment and underemployment rates continuing to fall,” wrote Sameer Samana, senior global market strategist, Wells Fargo Investment Institute, in emailed comments.

“However, the average workweek shrank and the participation rate held steady, which show that the recovery remains slow and uneven,” the Wells Fargo analyst wrote.

Outside of jobs, a report on international trade in goods and services for May showed a deficit of $72.1 billion expected, slightly higher than had been expected and higher than the $68.9 billion deficit in April. 

A reading on factory orders for May is due at 10 a.m. and are expected to show a rise of 1.5% on the month.

Oil may also be in focus on Friday as Organization of the Petroleum Exporting Countries and a Russia— members of the group known as OPEC+—delayed a decision about easing output curbs that have been in place to help stabilize crude prices.

The oil decision comes as the group is contending with the after effects of the COVID pandemic on energy demand and concerns about the impact of variants of the coronavirus in parts of the world against expectations for higher demand as many economies emerge from lockdowns and stay-at-home protocols put in place to limit the pandemic’s spread.

Investors may keep on eye on talks surrounding the U.S.’s debt ceiling also, amid reports suggesting that Congress has no plans to raise it.

Which companies are in focus?
  • Shares of Chinese ride-sharing company Didi Global Inc. DIDI fell over 6% after China’s internet regulator said it’s investigating the company’s cybersecurity risks, Dow Jones Newswires reported.

  • Tesla Inc. TSLA announced Friday that it produced 206,421 vehicles and delivered 201,250, just below FactSet expectations for 207,000 vehicle sales. Shares were up over 2.5%.

  • Shares of donut chain Krispy Kreme
    DNUT,
    -7.90%

     were cown over 6% after the company closed its first trading day up 24%.

  • Brokerage firm Robinhood Markets
    HOOD,

    made public its plans to list on the Nasdaq Inc. exchange under the ticker “HOOD.”

How are other assets faring?
  • The yield on the 10-year Treasury note TMUBMUSD10Y slipped over 2 basis points to 1.45%. Yields and debt prices move in opposite directions.

  • The ICE U.S. Dollar Index DXY, a measure of the currency against at basket of six major rivals, was down 0.1%.

  • The U.S. oil benchmark CL00, was trading 0.4% lower at $74.89 a barrel as investors awaited a delayed decision by OPEC+ on whether to further boost production beginning next month. Gold futures GCQ21 was trading $8.90, or 0.5%, at $1,785.30 an ounce, heading for its highest settlement since June 16.

  • In European equities, the Stoxx 600 Europe SXXP rose 0.2% and London’s FTSE 100 UKX slipped less than 0.1%.

  • In Asia, the Shanghai Composite SHCOMP tumbled 2%, while Japan’s Nikkei 225 NIK rose 0.2%.


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