U.S. Stocks Close Mixed Following Monthly Jobs Data

(RTTNews) - After ending the previous session on opposite sides of the unchanged line, the major U.S. indexes turned in a mixed performance during trading on Friday. While the Nasdaq pulled back of Yesterday's record closing high, the Dow and S&P 500 reached new record closing highs.

The Nasdaq fell 59.36 points or 0.4 percent to 14,835.76, but the Dow climbed 144.26 points or 0.4 percent to 35,208.51 and the S&P 500 rose 7.42 points or 0.2 percent to 4,416.56

The mixed performance on Wall Street came as better than expected jobs data added to economic optimism but also raised concerns about the outlook for monetary policy.

Before the start of trading, the Labor Department released a report showing non-farm payroll employment spiked by 943,000 jobs in July after surging by an upwardly revised 938,000 jobs in June.

Economists had expected employment to jump by 870,000 jobs compared to the addition of 850,000 jobs originally reported for the previous month.

The stronger than expected job growth was partly due to sharp increases in employment in leisure and hospitality and local government education, which shot up by 380,000 jobs and 221,000 jobs, respectively.

Reflecting the strong job growth, the unemployment rate slid to 5.4 percent in July from 5.9 percent in June, falling to its lowest level since March of 2020. Economists had expected the unemployment rate to dip to 5.7 percent.

Last week, Federal Reserve Chair Jerome Powell indicated further progress was needed in labor market recovery before the central would consider scaling back stimulus.

"We had thought that continued slow progress on the employment recovery would see the Fed hold off tapering its asset purchases until early next year," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He continued, "But with Board members Richard Clarida and Christopher Waller both recently suggesting a run of stronger jobs growth would be enough to meet the threshold of 'substantial further progress,' the risks may now be titled towards that process beginning sooner than we had expected."

Banking stocks moved sharply higher in morning trading, with the KBW Bank Index surging up by 2.6 percent to its best closing level in almost two months.

Significant strength was also visible among oil service stocks, as reflected by the 2.4 percent jump by the Philadelphia Oil Service Index. The strength in the oil service sector came despite a decrease by the price of crude oil.

Brokerage stocks also showed a considerable move to the upside, driving the NYSE Arca Broker/Dealer Index up by 1.7 percent

On the other hand, gold stocks showed substantial move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 3.8 percent.

The sell-off by gold stocks comes amid a nosedive by the price of the precious metal, with gold for December delivery plunging $45.80 to $1,763.10 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Friday. Japan's Nikkei 225 Index rose by 0.3 percent, while China's Shanghai Composite Index dipped by 0.2 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the French CAC 40 Index has climbed by 0.6 percent, the German DAX Index is up by 0.3 percent and the U.K.'s FTSE 100 Index is up by 0.1 percent.

In the bond market, treasuries moved sharply lower following the better than expected jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped by 7.3 to 1.290 percent.

Looking Ahead

Next week's trading may be impacted by reaction to reports on consumer and producer price inflation, which could further impact the outlook for monetary policy.