What’s happening: The blue-chip Dow Jones index and the benchmark S&P500 closed higher on Friday, driven by better-than-expected jobs data.
What happened: Although US stocks were largely supported by the release of the NFP (non-farm payroll) report, concerns over the US economy remained.
Investors also worried that the higher-than-expected NFP headline data may result in the Congress dragging its feet even more on announcing the new fiscal stimulus package. Even amid these concerns and the subdued performance on the last trading day, Wall Street recorded sharp gains for the week.
Why it matters: The NFP report showed that the US economy added 1.76 million jobs in July. While this beat the consensus estimate of 1.7 million job additions, the headline number was significantly lower than the 4.8 million job additions in June, highlighting a lacklustre labour market and continued challenges in the US corporate landscape.
On the positive side, the NFP report showed a decline in the unemployment rate to 10.2% in July, from June’s reading of 11.1%.
The jobs report supported investor sentiment, while various US states continued to battle with rising covid-19 cases and the growing dependence on the government’s jobless benefits and stimulus cheques. Meanwhile, the talks on the second covid-19 stimulus bill remain in deadlock. Investors also remained cautious given the rising tensions between the US and China, with the Trump administration practically banning TikTok and WeChat.
The major US stock indices remained in the red for most of the trading day on Friday, but rebounded towards the end of the session, as investors responded to the jobs report.
The Dow Jones index inched up 46.50 points to close at 27,433.48 on Friday. The S&P 500 index rose 0.1% to 3,351.28, while the Nasdaq Composite Index slipped 0.9% to close at 11,010.98, after falling as much as 1.5% earlier in the session.
For the week, the Dow Jones index climbed 3.8%, recording its strongest percentage rise since June 5. The S&P 500 gained 2.5%, while the Nasdaq rose 2.5% during the week.
What to watch: With stalled negotiations on the new stimulus package, President Donald Trump signed executive orders on Saturday for an additional compensation of up to $400 per week in unemployment benefits, much lower than the previous program of $600.
Investors await reports on job openings and consumer inflation expectations scheduled for release today. The number of job openings, which rose by 401,000 to 5.397 million in May, is expected to decline to 4.91 million in June.