The S&P 500 rose 0.3% Friday, closing out a second straight winning week, after traders read a surprise drop in July hiring as room for the Federal Reserve to leave rates alone. Nonfarm payrolls fell 23,000 against a forecast gain, and fed funds futures now show most traders expecting the Fed to hold rather than hike in September. Software earners led the session, with Atlassian up 34% and Airbnb up 12% on earnings beats.
The S&P 500 climbed 0.3% Friday. Gains were sharper for the Nasdaq Composite, up 0.8%. Meanwhile, the Dow Jones Industrial Average added 67 points, or 0.1%.
Friday's advance capped a second straight winning week for stocks. Weekly, the S&P 500 has risen more than 3% week to date.
Chip stocks fueled a bigger move elsewhere: the Nasdaq is on track for its best weekly performance since April with a gain topping 4%. The Dow, for its part, has climbed nearly 3% this week.
Payrolls unexpectedly shrink
July nonfarm payrolls fell by 23,000. Economists polled by Dow Jones had forecast a gain of 83,000.
The unemployment rate slipped to 4.1%. Yet the labor force participation rate dropped to 61.4% from 61.5% in June, its lowest level in more than five years. The miss carries extra weight because June's initial estimate of 57,000 jobs added was revised down to just 20,000, Crypto Briefing reported, suggesting the labor market had been cooling faster than earlier data showed.
Rate-hike odds tumble
A majority of fed funds futures traders now expect the Fed to hold its benchmark rate at 3.50% to 3.75% in September, according to the CME FedWatch tool cited by CNBC. Just a day earlier, traders had priced in 55% odds of a quarter-point hike.
Three Fed officials had dissented in favor of raising rates at the Fed's last meeting. Hiking into a labor market that just posted negative job growth needs an inflation urgency the data doesn't obviously support, leaving those officials with a tougher case for a rate hike in September.
Software earnings drive gains
Cloudflare surged 10% after issuing a strong full-year and current-quarter outlook. Atlassian jumped 34% on a fourth-quarter earnings and revenue beat with upbeat guidance. Airbnb rallied 12% after beating estimates on both the top and bottom lines.
Sources: CNBC, Crypto Briefing
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