Dow climbs 100 factors and closes at file excessive after job report exhibits sturdy financial rebound

Stocks tied to the economic rebound rose stronger than expected on Friday’s job report, pushing two key market averages to all-time highs.

The Dow Jones Industrial Average rose 144.26 points, or 0.4%, to close at an all-time high of 35,208.51. The S&P 500 rose nearly 0.2% to hit its own record high at 4,436.52, while the tech-heavy Nasdaq Composite fell 0.4% to settle at 14,835.76.

For the week, the Dow rose 0.7% from three in its second positive week. The S&P 500 rose 0.9% for the week and is now up 18.1% for the year. The Nasdaq rose 1.1% over the course of the week.

Friday’s job report showed that the U.S. economy created 943,000 jobs in July, according to the Department of Labor. Economists estimate that the economy created 845,000 jobs in the past month, according to Dow Jones estimates. The unemployment rate fell to 5.4%, which is below the estimate of 5.7%.

Bank stocks led gains after the report as interest rates skyrocketed and corporate profitability prospects improved. JPMorgan’s shares were up 2.8% while Bank of America was up 2.9%. Wells Fargo was up 3.8%. Goldman Sachs stocks hit all-time highs and regional bank stocks had their best day in nearly a month.

The US 10-year Treasury yield, which fell over the summer, rose as high as 1.3% on Friday. The returns move inversely to the prices.

Industrial, retail and energy stocks also rose as the job report allied concerns about the economic recovery.

On the other hand, technology stocks fell as the rise in interest rates led investors to take profits on the names and reinvest in stocks that could benefit more from faster economic growth. Amazon and Apple were down slightly, while Zoom Video fell 3.8%. Higher interest rates can expose the high valuations of technology stocks.

Defensive stocks like utilities and healthcare companies also fell after the report.

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“I think these are really, really good numbers for the stock market. It’s just a number, they tend to be volatile, have to be used with caution. … And most of all, it is leading to a major shift in the conduct of this stock market, “said James Paulsen, Leuthold Group’s chief investment strategist, on CNBC’s” Squawk Box “.

“The S&P isn’t doing much, but the pull here has shifted towards cyclical and small, maybe even to some extent international, markets that are more sensitive to the economy, and away from growth and defensive stocks that have been around for some time Lead time. ” here, “added Paulsen.

Friday marked the latest in a series of record highs for the S&P 500, which continued to rise this summer, despite heightened concerns about the peak of economic growth and the spread of the Delta variant of Covid-19.

“The background to venture investing remains constructive – financial conditions are loose, cash flows are healthy, savings rates are high and policies are largely supportive,” wrote Dan Loeb, Third Point’s hedge fund manager, in a statement to clients on Friday .

The Labor Department report comes after the weekly number of initial filings reported Thursday hit 385,000, which was in line with expectations, and ADP’s private payroll report disappointed on Wednesday.

Wall Street focused on Friday’s labor market report as it could affect future Federal Reserve policy. Fed Governor Christopher Waller told CNBC on Monday that he would campaign for the central bank to postpone its bond purchases if the next two job reports show a healthy rebound.

The July report showed the economy was recovering, but not as quickly to force immediate action from the central bank, some strategists said.

“A nice number. Strong, but not overly strong. … I think the Fed will take comfort that the significant progress in the direction of labor advancement is in the works, but the report was not worrying, ”said Yung-Yu Ma, chief investment strategist at BMO Wealth Management. “While the number has been strong and last month’s numbers have been revised upwards, I don’t think anything will be seen that would cause the Fed to change course.”

Small-cap stocks did well according to the report, with the Russell 2000 up 0.5% and ending the week just under 1% higher.

A busy week of profits continued on Friday with several notable reports including from Canopy Growth, AMC Networks, DraftKings, Norwegian Cruise Line and Goodyear Tire. Expedia’s shares fell 7.9% after the travel company’s earnings per share fell short of expectations in its quarterly report.

Additionally, Berkshire Hathaway’s Saturday morning earnings are on deck.

So far, 89% of the companies in the S&P 500 have reported earnings this quarter, and 87% of those have exceeded earnings expectations, according to FactSet. This is well on the way to becoming the best quarter for earnings surprises since at least 2008.

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