Stronger Than Expected Jobs Data Leads To Choppy Trading On Wall Street

(RTTNews) - After trending higher over the past few sessions, stocks showed a lack of direction over the course of the trading day on Friday. The major averages recovered from an early move to the downside but spent the rest of the session bouncing back and forth across the unchanged line.

The major averages eventually finished the session narrowly mixed. While the Nasdaq inched up 13.96 points or 0.1 percent to 11,635.08, the Dow dipped 46.40 points or 0.2 percent to 31,338.15 and the S&P 500 edged down 3.24 points or 0.1 percent to 3,899.38.

Despite the mixed performance on the day, the major averages all moved higher for the week. The Nasdaq spiked by 4.6 percent, while the S&P 500 jumped by 1.9 percent and the Dow climbed by 0.8 percent.

The choppy trading on Wall Street came following the release of a closely watched Labor Department showing stronger than expected U.S. job growth in the month of June.

The data eased worries about the economy while also adding to concerns about aggressive interest rate hikes by the Federal Reserve.

The Labor Department said non-farm payroll employment jumped by 372,000 jobs in June after surging by a revised 384,000 jobs in May.

Economists had expected employment to increase by 268,000 jobs compared to the addition of 390,000 jobs originally reported for the previous month.

"The strong 372,000 gain in non-farm payrolls in June appears to make a mockery of claims the economy is heading into, let alone already in, a recession," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, "That may be enough to solidify the case for another 75bp rate hike at the Fed's meeting later this month, although signs that wage growth is cooling and the recent plunge in commodity prices both suggest the inflation outlook could improve more quickly than officials had feared."

The stronger than expected job growth reflected notable job gains in professional and business services, leisure and hospitality, and healthcare.

Meanwhile, the report showed the unemployment remained at 3.6 percent for the fourth month in a row, matching economist estimates.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Tobacco stocks showed a substantial move to the downside, however, with the NYSE Arca Tobacco Index plunging by 3.4 percent to its lowest closing level in well over a year.

Telecom and steel stocks also saw some weakness on the day, while strength was visible among brokerage and housing stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index inched up by 0.1 percent, while Hong Kong's Hang Seng Index rose by 0.4 percent.

The major European markets also moved to the upside over the course of the session. While the German DAX Index jumped by 1.3 percent, the French CAC 40 Index climbed by 0.4 percent and the U.K.'s FTSE 100 Index crept up by 0.1 percent.

In the bond market, treasuries extended the notable pullback seen over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, advanced 9.3 basis points to 3.101 percent.

Looking Ahead

Next week's trading is likely to be impacted by reaction to reports on consumer and producer price inflation, which could impact the outlook for interest rates.

Reports on retail sales, industrial production and consumer sentiment are also likely to attract attention later in the week.

Traders are also likely to keep an eye on quarterly results from financial giants JPMorgan Chase (JPM), Morgan Stanley (MS), Citigroup (C) and Wells Fargo (WFC).