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Wall Street hits record on robust June jobs data

Published 07/02/2021, 07:17 AM
Updated 07/02/2021, 06:50 PM
© Reuters. FILE PHOTO: A security camera is seen next to signage outside of the New York Stock Exchange (NYSE) in New York City, New York, U.S., June 28, 2021. REUTERS/Andrew Kelly

© Reuters. FILE PHOTO: A security camera is seen next to signage outside of the New York Stock Exchange (NYSE) in New York City, New York, U.S., June 28, 2021. REUTERS/Andrew Kelly

By Herbert Lash

NEW YORK (Reuters) - Wall Street scaled new highs on Friday, with the S&P closing up for a seventh straight day, after jobs data for June showed robust hiring yet persistent weakness in the labor market that will keep the Federal Reserve from raising interest rates any time soon.

The three major U.S. indices - the S&P, Dow and 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 Labor Department's employment report showed nonfarm payrolls increased by 850,000 jobs last month, but the total is 6.8 million below its peak in February 2020.

The better-than-expected data was a tentative sign that a labor shortage overhanging the U.S. economy was 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 U.S. Treasury note slid to 1.431%.

"For capital markets, equities and bonds, this was a goldilocks report," said Darrell Cronk, chief investment officer at Wells Fargo (NYSE:WFC) Wealth & Investment Management. "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 stronger-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 is farther in the future.

Microsoft Corp (NASDAQ:MSFT) added the most to the S&P's broad advance, followed by Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN) and Google parent Alphabet (NASDAQ:GOOGL) 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%, to 34,786.35, the S&P 500 gained 32.4 points, or 0.75%, to 4,352.34 and the Nasdaq Composite added 116.95 points, or 0.81%, to 14,639.33.

For the week, the S&P rose 1.7%, the Dow added 1.0%, the nasdaq gained 1.9%.

Trading was light heading into the long weekend, with U.S. markets shut on Monday in observance of Independence Day. Volume on U.S. exchanges was 7.95 billion shares, compared with the 10.81 billion average for a full session over the last 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, said David Joy, chief market strategist at Ameriprise Financial (NYSE:AMP).

"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, said Bill Northey, senior investment director at U.S. Bank Wealth Management.

"Some of the most impaired corners of the U.S. economy, namely retail, leisure and hospitality, showed some of the strongest improvements," Northey said.

Focus now shifts towards the second-quarter earnings season and progress on President Joe Biden's infrastructure bill that could help the equity market keep the momentum.

Investors will look to minutes from the Fed's June meeting next week for the latest view on inflation, bond tapering and rates at a time when the easy monetary stance appears to be at an inflection point amid a booming U.S. economy.

Tesla (NASDAQ:TSLA) Inc rose 0.15% after it posted record vehicle deliveries for the second quarter that also beat Wall Street estimates. The stock was lower much of the session. CEO Elon Musk has warned of challenges securing chips and raw materials.

Virgin Galactic Holdings (NYSE:SPCE) rose 4.1% after the space tourism firm said billionaire entrepreneur Richard Branson would travel to the edge of space on the company's test flight on July 11, beating out fellow aspiring billionaire astronaut Jeff Bezos.

Didi Global Inc fell 5.3% after China's cyberspace administration said it would conduct a new investigation into the Chinese ride-hailing giant to protect national security and the public interest.

Advancing issues outnumbered declining ones on the NYSE by a 1.13-to-1 ratio; on Nasdaq, a 1.48-to-1 ratio favored decliners.

The S&P 500 posted 58 new 52-week highs and no new lows; the Nasdaq Composite recorded 79 new highs and 45 new lows.

© Reuters. FILE PHOTO: A security camera is seen next to signage outside of the New York Stock Exchange (NYSE) in New York City, New York, U.S., June 28, 2021. REUTERS/Andrew Kelly

(Graphic: S&P 500 versus U.S. employment, https://fingfx.thomsonreuters.com/gfx/mkt/yzdvxlqkjvx/spx_emp.PNG)

(This story in second bullet and paragraph two, corrects to say longest streak of consecutive record closes rather than gains)

Latest comments

Korea tapering in Q3. San Francisco’s FED Daly saying US tapering should begin before the end of the year. We ran hot and it was fun, but we need to come back to reality now.
Amateur jabberers. Going on your hopes rather than current stock market reality. Never heard of " Don't fight the Fed" and "Don't fight the tape"
How is this good news? A second of investigation reveals that the biggest chunk of jobs was leisure and hospitality. More of the same problem.
More leisure and hospitality jobs. Yay, you can work the rest of your life for low pay & no benefits.
They hide, distort, twist and manipulate data to fit the FED agenda
It's almost like FAANG and few other stocks pile up their values getting NQ100 and SP500 rise. Once they lose the shine, it'll be interesting times ahead.
the nonfarm payroll data was strong.  I believe the market is still not pricing in that the Fed will be tapering bond-buying this year. This could ultimately lead to a breakdown in the equity markets. Perhaps, the Fed is not making the message clear enough so that the markets can begin the process of pricing in a change in policy.  Otherwise, we are facing a stock market crash which will set back the Fed's efforts of improving the economy. imo
I think it is not good data. Unemployment up.
 I have no idea on the manipulation. Maybe so.
Just Google "big banks market manipulation". Tons of stuff.
 ok I will
Lol the fed is trying so hard to sell the "boy wasnt covid weird but everything is fine now, just a little inflation, arent u glad we saved the day?. Go back to work and buy some AAPL" while never mentioning that they have been doing bond purchases since 2019 and theres a >10 trillion dollar corporate debt bubble the whole time
That's exactly what's going on and why they're doing everything to fix things with big banks, and that included fraud and manipulation as what big banks have been doing for decades already. All they get is small fines compared to gains and that's all. It won't end as long as nobody goes to jail for these financially huge criminal activities.
Looks like the markets are buying the fudge...they're barely up
*aren't
Truly hope so
companies cant pay new hires more than current employees. If they do, they have to give raise to all their employees. Some companies do. Most just wait until people unemployment benefits run out
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