Tech leads Wall Street higher as jobs data fall short
NEW YORK (Reuters) – US stocks closed at record levels for a second consecutive session on Friday, as gains in technology and industrial stocks more than offset a lukewarm jobs report.
Nonfarm payrolls increased by 138,000 in May, well short of the 185,000 expected by economists. The previous two months were revised lower by 66,000 jobs than previously reported.
Average hourly earnings rose 0.2% in May, following a similar gain in April, but the unemployment rate fell to a 16-year low of 4.3%.
Despite the disappointing data, market participants still largely anticipate the Federal Reserve to raise rates at its June 13-14 meeting, with traders expecting a 90.7% chance of a quarter-point hike, according to Thomson Reuters data.
“It’s certainly surprising. It doesn’t really correlate well with virtually all the other data on the labor market that we’re seeing,” said Russell Price, senior economist at Ameriprise Financial Services Inc in Troy, Michigan.
The modest increase, however, could raise concerns about the economy’s health after gross domestic product growth slowed in the first quarter and a string of softening data last week, including reports on housing and auto sales.
The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population. Job gains are slowing as the labor market nears full employment.
The Dow Jones Industrial Average rose 62.11 points, or 0.29%, to 21,206.29, the S&P 500 gained 9.01 points, or 0.37%, to 2,439.07 and the Nasdaq Composite% added 58.97 points, or 0.94%, to 6,305.80.
For the week, the S&P rose 0.95%, the Dow added 0.59% and the Nasdaq gained 1.54%.
Industrials, up 0.49%, and technology, up 1.04%, were the best performing sectors. The tech sector has been the top performer among the major S&P sectors, with a 2017 gain of 21.26%.
The tech sector was led by Broadcom, which rose more than 8% to hit an alltime high of $253.76, after the chipmaker’s quarterly results beat analysts’ expectations.
Shares of financials, which benefit from higher interest rates, fell as much as 0.9% after the jobs data sparked worry the Fed could become cautious after the June meeting, and closed down 0.37%.
Energy was the worst-performing sector, down 1.18%. Brent oil tumbled below $50 a barrel on worries that President Donald Trump’s decision to abandon a climate pact could spark more crude drilling in the United States and worsen a global glut.
Lululemon Athletica jumped 11.5% to $54.29 after the athletic apparel maker’s quarterly profit beat estimates.
The Bank of Israel on Friday set its representative rate for the US dollar at NIS 3.5580, for the British pound at NIS 4.5788, for the Canadian dollar at NIS 2.6284, for the Australian dollar at NIS 2.6257, and for the South African rand at NIS 0.2748. The central bank set the representative rate for the euro at NIS 3.9940, and for 100 yen at NIS 3.1910.