(Reuters) – The S&P 500 and the Nasdaq hit record highs on Friday as strong monthly payrolls data bolstered confidence in a labor market recovery, but stopped short of sparking fears about sooner-than-expected tapering by the Federal Reserve.
The Labor Department’s closely watched employment report showed nonfarm payrolls increased more than expected in June as companies raise wages and offered incentives to entice millions of unemployed Americans.
The unemployment rate rose to 5.9% last month from 5.8% in May.
“For capital markets, equities and bonds, this was a goldilocks report. It was strong enough but not too strong which is exactly what they wanted to see,” said Darrell Cronk, chief investment officer at Wells Fargo (NYSE:WFC) Wealth & Investment Management in New York.
Markets have been spearheaded by inflation and economic data in the past few sessions, with investors oscillating between “value” and “growth” stocks on fears that a potentially stronger-than expected economic recovery and runaway inflation could force the Federal Reserve to pare back its support.
After a strong start to the year, the S&P 500 and the Nasdaq began the second half at record levels, with technology, communication services and consumer discretionary sectors among the top boosts on Friday.
“We suggest bar-belling growth and value by having exposure to information technology to consumer discretionary and also maintaining investment in financial as well as industrial stocks,” said John Stoltzfus, chief investment strategist at Oppenheimer Asset Management in New York.
Focus now also shifts towards the second-quarter earnings season and progress on President Joe Biden’s infrastructure bill that could help the equity market keep the momentum.
Investors will look to minutes from the Fed’s June policy meeting next week which will offer more details on the policymakers’ thinking on inflation, bond tapering and interest rates.
Trading volumes were expected to be light heading into the long weekend, with markets shut on Monday, July 5 in observance of Independence Day.
At 11:44 a.m. ET, the Dow Jones Industrial Average was up 60.07 points, or 0.17%, at 34,693.60, the S&P 500 was up 15.77 points, or 0.37%, at 4,335.74, and the Nasdaq Composite was up 59.99 points, or 0.41%, at 14,582.37.
Tesla (NASDAQ:TSLA) Inc rose 0.6% after it posted record vehicle deliveries for the second quarter that also beat Wall Street estimates.
Virgin Galactic Holdings (NYSE:SPCE) jumped 6.7% after the space tourism firm said billionaire entrepreneur Richard Branson would travel to the edge of space on the company’s test flight on July 11, beating out fellow aspiring billionaire astronaut Jeff Bezos.
Didi Global Inc slipped 6.3% after China’s cyberspace administration said it would conduct a new investigation into the Chinese ride-hailing giant to protect national security and the public interest.
Investors are keeping an eye out for the hotly anticipated market debut by Robinhood Markets Inc in the coming weeks after the brokerage said in a filing on Thursday it was aiming for a $40 billion IPO valuation.
Declining issues outnumbered advancers by a 1.2-to-1 ratio on the NYSE and by a 2-to-1 ratio on the Nasdaq.
The S&P index recorded 44 new 52-week highs and no new low, while the Nasdaq recorded 61 new highs and 35 new lows.
Graphic: S&P 500 versus U.S. employment – https://fingfx.thomsonreuters.com/gfx/mkt/yzdvxlqkjvx/spx_emp.PNG
