The Nasdaq Composite rose in choppy trading on Friday as investors reacted to a stronger-than-expected jobs report that may likely keep the Federal Reserve heading in the right direction for its aggressive rate hikes.
The Nasdaq gained 0.12% to settle at 11,635.31, while the S&P 500 dipped 0.08% to three,899.38. The Dow Jones Industrial Average closed down 46.40 points, or 0.15%, at 31,338.15. The Nasdaq has risen in five straight days for the primary time this 12 months.
Nonfarm payrolls increased 372,000 within the month of June, higher than the 250,000 Dow Jones estimate and continuing what has been a robust 12 months for job growth, in keeping with data Friday from the Bureau of Labor Statistics.
All three major averages finished up for the week. The roles report and a recent decline in commodities prices have made a have made a so-called “soft landing” for the U.S. economy a bit more likely, boosting stocks, said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.
“A few of what were very acute recession fears have probably backed off a bit of bit. … I feel the market began to just accept that a bit of more as a possibility this week,” Ma said.
Health care stocks were among the many outperformers. Centene Corp. and McKesson rose greater than 3%, while vaccine makers Moderna and Regeneron each added greater than 2%.
Electric automaker Tesla jumped 2.5%. Chipmakers and cyber security stocks also boosted the tech sector. ON Semiconductor rose 2.8%, while Fortinet gained 1.8%.
Treasury yields jumped sharply after the roles data was released, which can have limited gains for stocks. The two-year Treasury yield held above the 10-year Treasury yield, an inversion that’s seen by many as a recession indicator.
Though the roles report was a positive sign for the state of the U.S., many investors imagine that may allow the Federal Reserve to aggressively fight inflation with rate hikes in the approaching months.
“Excellent news is bad news for the market today…you could not ask for anything higher from this jobs report when it comes to broad gains, low unemployment, the number was above expectations,” said Michael Arone of State Street Global Advisors. “Wages were growing but at a slower rate. …That was thing, and yet the markets sort of shrugged their shoulders here because at the top, the conclusion is the Fed goes to go by 75 basis points.”
For the week, the Nasdaq closed up 4.6%, while the S&P 500 gained 1.9%. The Dow lagged but still gained about 0.8%.
Phillip Toews, the CEO at Toews Corporation, said that the market appears to be “drifting higher” from oversold conditions but that the aggressive Fed will keep a bigger rally from happening within the short term.
“Unfortunately, the Fed really implicitly has an objective now of keeping financial assets down, and we’re just going to have a really hard time getting used to that,” Toews said. “That is certainly one of the largest things they will do straight away to maneuver the dial on inflation. …There will likely be a day once I am very positive in regards to the stock market, but that day shouldn’t be today.”
On Friday, commodities stocks underperformed, continuing recent volatility in those sectors. Mining stock Freeport-McMoRan lost 4.2%.
Travel stocks were down for the day, with Caesars Entertainment falling 4.7% and Carnival Corp. falling 3.4%.
Twitter fell greater than 5% and was among the many worst performers within the S&P 500 after the Washington Post reported that Elon Musk was planning to back out of his takeover offer.
The second-quarter earnings season begins in earnest next week, with reports due out from most major banks. The June consumer price index report, scheduled for Wednesday, will even be a key focus for investors.
— CNBC’s Patti Domm contributed to this report.
Lea la cobertura del mercado de hoy en español aquí.