Stocks finished higher on Friday, with the S&P 500 making another all-time high, despite an August jobs report that was mixed, as nonfarm payrolls grew by far less than expected, though the unemployment rate fell to 6.1%.
First, the scoreboard:
- Dow: 17,137.3, +67.7, (+0.4%)
- S&P 500: 2,007.7, +10.0, (+0.5%)
- Nasdaq: 4,582.9, +18, (+0.4%)
And now, the top stories on Friday:
1. The biggest news on Friday was the August jobs report, which showed nonfarm payrolls grew by 142,000 in August, far less than 230,000 that was expected by economists. Despite payrolls gains that disappointed, the unemployment rate fell to 6.1% from 6.2%. The report showed that wage growth also came in in-line with expectations, with wages growing 2.1% year-over-year and 0.2% month-over-month. The labour force participation rate fell slightly, to 62.8% from 62.9%, with August marking the fourth time in five months that the labour force participation rate has come in at 62.8%, the lowest in more than 20 years.
2. Following the report, Ian Shepherdson at Pantheon Macroeconomics said, “In one line: Noise happens, and this looks like noise. No other data signal slowing labour demand.” David Zervos at Jefferies said this market is “perfect” for risk assets like stocks, as Zervos said the report puts no pressure on the Fed to raise interest rates sooner than is necessary.
3. Tesla announced on Thursday afternoon that it will build its gigafactory to manufacture lithium-ion batteries in Nevada. Tesla CEO Elon Musk said that Nevada didn’t offer the company the largest incentive deal, but said the most important part of building the factory is time to completion, and Nevada was more prepared than any state to get the project off the ground. California, Texas, and New Mexico were also among the states that Tesla considered for its gigafactory.
4. Tesla shares also had a tough day on Friday, falling more than 3% after Musk said that the company’s stock price is “kind of high right now.” Speaking with CNBC’s Phil LeBeau, Musk said, “I think our stock price is kind of high right now, to be totally honest. Or rather, let me put it to you this way: If you care about the long-term of Tesla, I think the stock is a good price. If you’re looking at the short-term, it’s less clear.”
5. Family Dollar rejected the most recent takeover bid from Dollar General, which raised its bid for the rival discount retailer to $US9.1 billion, with Family Dollar saying the most recent offer wasn’t reasonable because it would be unlikely to gain regulatory approval. “There is a very real and material risk that the transaction proposed by Dollar General would fail to close, after a lengthy and disruptive review process,” Family Dollar Chief Executive Howard Levine said in a statement. Family Dollar shares fell 1% on Friday, while shares of Dollar General were down more than 2%.
6. Among the biggest stock losers on Friday was surfing apparel brand Quiksilver, which fell more than 26% after reporting a $US220 million loss in the third quarter on revenue that fell 19% compared to the prior year. Friday’s sharp drop in Quiksilver shares also marks the second straight quarter that the stock has fallen sharply after its quarterly report.