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Dow up 300 points as ‘Goldilocks’ report shows US added 315,000 jobs in August

Dow up 300 points as 'Goldilocks' report shows US added 315,000 jobs in August

U.S. stocks rallied on Friday after data showed the U.S. economy added more than 300,000 jobs last month, perfectly in line with investor expectations.

How Stocks Trade
  • The Dow Jones Industrial Average DJIA,
    advanced 332 points, or 1.1%, to 31,999.

  • The S&P 500 SPX,
    rose 45 points, or 1.2%, to 4,015.

  • The Nasdaq Composite COMP,
    climbed 135 points, or 1.2%, to 11,922, on track to snap a five-day losing streak.

The Dow Jones and S&P 500 were looking for back-to-back gains after ending four-day losing streaks on Thursday. All three major indices were on track for weekly declines.

What drives the markets?

Stocks found support after the August jobs report showed the US economy added 315,000 new jobs last month, roughly matching a survey’s expectation of 318,000 jobs. of Wall Street Journal economists.

While the overall figure was in line with expectations, the unemployment rate surprised economists by climbing to 3.7% from 3.5% in July. Admittedly, this increase was largely attributable to a slight increase in the labor force participation rate, which rose from 62.1% to 62.4%.

Analysts said the report was neither too hot nor too cold.

Larry Cordisco, co-lead portfolio manager of Osterweis Growth & Income Fund, offered a similar assessment in a phone interview with MarketWatch.

“It looks like a Goldilocks number, that’s kind of where the expectations were,” said Larry Cordisco, co-lead portfolio manager of the Osterweis Growth and Income Fund, in a phone interview. “It’s neither showing a big downturn nor too much of an upswing, so I think combined with the overall market positioning, that’s a positive for stocks today.

“We’ll see if it holds but that’s the first reaction,” he added.

The data reinforced perceptions that the Federal Reserve will likely raise the federal funds rate by 75 basis points for the third consecutive time when policymakers meet later this month.

“A 75 basis point rate hike is almost certain at this point,” said Ron Temple, head of US equities at Lazard Asset Management.

Some had feared that a repeat of July’s hit report, which showed more than 500,000 jobs created in the space of a month, would push the Fed to be even more aggressive in its monetary policy.

See: Trading on the ‘Goldilocks’ jobs report may be dangerous as the S&P 500 encounters strong technical resistance

Treasury yields remained lower in the wake of the data, although short-term yields fell more than long-term yields, a sign that traders anticipate a less aggressive pace of interest rate hikes, which tend to have a disproportionate impact on the short-term markets. forward yields.

The 2-year Treasury TMUBMUSD02Y,
the yield was 9.4 basis points at 3.435%, while the 10-year yield TMUBMUSD10Y,
was down four basis points to 3.226%.

As yields fell, the ICE US Dollar Index DXY,
retreated to 109.27, down 0.6% on the day, even as the greenback advanced to trade north of 140 yen USDJPY,
to the dollar for the first time since the late 1990s. The move in the index, which measures the strength of the dollar against a basket of rival currencies, was largely driven by a 0.6% gain in the EURUSD of the euro,
against the dollar, which brought the common currency back to parity with its American rival.

Major US exchange-traded funds also rose in the news, with the SPDR S&P 500 Trust SPY,
SPDR Dow Jones Industrial Average Trust DIA,
and the Invesco QQQ QQQ ETF,
progressing in line with their underlying indices.

Small cap stocks also traded higher, with the Russell 2000 RUT,
climbed 1.2%.

Cryptocurrency prices also climbed on Friday, with bitcoin BTCUSD,
up 1.2% to $20,316, according to data from CoinDesk, and Ethereum ETHUSD,
up 3.3% to $1,633, according to data from Kraken.

Elsewhere, orders for manufactured goods fell 1% in July, the Commerce Department said on Friday, thwarting expectations of a 0.2% gain. The drop in orders marked the first decline after nine consecutive monthly gains.

Actions in the spotlight
  • Starbucks Corporation
    shares fell 0.4% as the company named Laxman Narasimhan to take over as CEO.

  • Broadcom Inc.
    Shares rose 4.7% after the company’s latest earnings report.

  • A rise in crude oil prices helped support stocks of oil and gas companies such as APA Corp.APA,
    Halliburton Co.
    and Marathon Oil Corp.
    crude West Texas Intermediate CLV22,
    futures for October delivery rose 1.8% to $88.12 in recent trading following a G-7 plan to try to cap Russian oil prices. Energy stocks were the best performers of the 11 S&P 500 sectors.

  • Lululemon Athletica
    rose 9.8% on strong earnings.

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