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S&P 500 climbs on Friday regardless of disappointing job report, heading for a profitable week

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Stocks rose on Friday as the S&P 500 headed for a successful week as optimism about a short-term debt ceiling trumped a disappointing job report.

Tech stocks led gains on Friday as poor payrolls eased concerns that the Federal Reserve would act quickly to remove monetary stimulus. Energy stocks also rose as US oil prices topped $ 80 a barrel.

The Dow Jones Industrial Average only rose 25 points. The S&P 500 rose 0.2%. The technology-oriented Nasdaq Composite gained 0.3%. The top averages for the week are all solidly green, with the Dow and S&P 500 up more than 1% since Monday.

Energy stocks rose on Friday as West Texas Intermediate crude oil futures, the US oil benchmark, topped $ 80 a barrel for the first time since November 2014 on Friday. Exxon Mobil was up 1.6%, Chevron was up 3%, and ConocoPhillips was up 3.2%.

Technology names also supported the market. Streaming giant Netflix rose more than 1% and Facebook nearly 1%.

Friday’s job report had something for both bears and bulls that explains the volatility in stocks after it was released. The headline count was a huge disappointment as the economy only created 194,000 jobs in September, well below the Dow Jones estimate of 500,000, the Department of Labor reported.

On the positive side, the unemployment rate itself has fallen to a much lower level than economists are predicting. At 4.8%, this is the same level as at the end of 2016. In addition, the job reporting error was revised to 366,000 in August, compared to the initial value of 235,000.

A grim job market picture could stall the Federal Reserve as it prepares to slow down its $ 120 billion monthly bond purchase program.

“That job number could call into question the starting point for the expansion later this year,” said Jamie Cox, managing partner of Harris Financial Group. “The report contains many positive aspects, such as an increase in the average hourly wage, but not enough to gloss over the fact that the employment picture remains murky with all the Covid-related countercurrents.”

The Labor Department said Thursday that unemployment claims totaled 326,000 for the previous week. That was less than the 345,000 economists asked for. In contrast, existing receivables fell by 97,000 to 2.71 million.

Stocks have had a volatile week but key averages have not been derailed by the debt ceiling debacle. Shares rose during Thursday’s regular trading as Washington reached an agreement to raise the debt ceiling through December.

Uncertainty about the debt ceiling has been a headwind for the market, but other risks remain, including accelerating inflation and rising interest rates. The yield on 10-year US Treasuries was around 1.57% on Thursday, UBS expects an increase to 1.8% by the end of the year.

Wall Street is also preparing for the third quarter reporting season, which begins next week.

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