The S&P 500 closed at a record 7,757.64 on Friday, gaining 0.62% and capping its strongest week since April after a surprise drop in July payrolls fed bets that the Federal Reserve will hold interest rates steady. The Nasdaq Composite and Dow Jones Industrial Average also posted their best weekly performances since April, while Goldman Sachs called the jobs report weaker than the headline numbers suggest.
The S&P 500 closed at a record 7,757.64 on Friday, up 0.62%. Traders read an unexpected drop in July payrolls as reason the Federal Reserve can skip a rate hike and hold policy steady for now. The Nasdaq Composite jumped 1.3% to 26,690.62. The Dow Jones Industrial Average added 151.83 points, or 0.28%, to 54,036.93.
All three posted their best weekly performances since April: the S&P 500 advanced 3.6%, the Nasdaq gained 5.2% and the Dow rose nearly 3%. Earlier in the week, the S&P 500 closed above 7,700 for the first time ever. Chip stocks drove the Nasdaq's rebound, with the iShares Semiconductor ETF ending the week up more than 7%.
Jobs report clouds the rate-hike outlook
July's nonfarm payrolls fell by 23,000, far below the gain of 83,000 that economists polled by Dow Jones had forecast. The unemployment rate fell to 4.1% even though economists had expected it to hold at 4.2%. The labor force participation rate dropped to 61.4%, its lowest level in more than five years, from 61.5% in June.
A majority of fed funds futures now expect the central bank to keep its benchmark rate at 3.50% to 3.75% at the September meeting, per the CME FedWatch tool. A day earlier, traders had priced in a 55% chance of a quarter-point hike. Goldman Sachs chief economist Jan Hatzius said the bank's composite measure of underlying job growth has fallen to 5,000, down from just over 70,000 a month earlier: "If you take the whole report together, it's weaker".
Earnings add fuel to the rally
Software stocks helped lead Friday's gains after results dispelled fears that artificial intelligence would disrupt the industry. Cloudflare popped more than 5% after issuing a solid full-year outlook. Atlassian jumped 35% after its fourth-quarter earnings and revenue beat expectations.
Airbnb also rallied 17% after posting a beat on the top and bottom lines.
Source: CNBC
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