S&P 500, Dow hit fresh records as strong July jobs report boosts economic outlook

NYSE traders
  • The S&P 500 and the Dow industrials close at record highs Friday after the US July jobs report.
  • The economy added 943,000 jobs in July, outstripping expectations of 870,000 jobs.
  • The Nasdaq Composite fell, with highly valued tech stocks hurt by the prospect of tightening monetary policy by the Fed.
  • See more stories on Insider’s business page.

The S&P 500 and the Dow Jones Industrial Average closed at record highs Friday after the July jobs report showed the labor market in the world’s largest economy remained in recovery mode, but large-cap tech stocks were left out of the day’s win on Wall Street.

The S&P 500 and blue-chips built on record highs set in the previous session, with the Labor Department turning in data showing the seventh straight month of US jobs expansion. The employment rate in July fell and employers raised wages. Financial stocks including JP Morgan on the Dow climbed.

But the Nasdaq Composite dropped, with expensive tech stocks hurt by the prospect that the Fed may start tapering asset purchases and move closer to rate hikes as the economy continues to recover from the impact of the COVID-19 pandemic.

“Declines in the Nasdaq highlight the shifting of funds away from growth stocks and towards recovery plays as the 10-year yield pushes upward,” wrote Joshua Mahony, senior market analyst at IG, in a note. The widely watched measure of borrowing costs climbed to 1.29%.

Here’s where US indexes stood at 4:00 p.m. on Friday:

“US jobs data provides reason for optimism, with the prospect of higher growth and a more hawkish Fed helping to lift banking stocks in particular,” wrote Mahony. “With wage growth at 4%, next week’s US CPI release becomes increasingly important.”

In July, nonfarm payroll employment rose by 943,000. That figure outstripped the 870,000 jobs expected in a Reuters survey of economists. The agency also upwardly revised June’s jobs reading, by 88,000 to 938,000.

July’s unemployment rate fell to 5.4% from 5.9%, beating the 5.7% consensus estimate, and wages grew by more than anticipated, rising 11 cents ($0.15) to $US30.54 ($AU42) and indicating businesses paid more to combat the labor shortage.

Around the markets, short-seller Jim Chanos blasted meme-stock traders as greedy and entitled.

Didi shares climbed on reports that the ride-hail firm is considering handing over control of its data to regulators to resolve a probe into the company following its US IPO.

Gold dropped further after the payrolls report, down 2.4%, to $US1,760.83 ($AU2,399) per ounce. Oil prices fell, with West Texas Intermediate crude losing 1.4%, to $US68.11 ($AU93) per barrel.

Bitcoin jumped 5.1% to $US42,957.57 ($AU58,527).