Stocks rise after strong job report
NEW YORK (Reuters) – US stocks rose on Friday after a solid jobs report pointed to strength in the domestic economy and supported expectations the Federal Reserve will raise interest rates this week.
Indexes ended lower for the week, however, with the S&P 500 and Nasdaq breaking a six-week streak of gains.
Government data showed 235,000 jobs were added in the public and private sectors in February, far exceeding economists’ average estimate of 190,000.
Fed Chairwoman Janet Yellen signaled a week ago the US central bank is set to raise rates this month if employment and other economic data hold up. The Fed meets on Tuesday and Wednesday.
With inflation edging up closer to the Fed’s 2% target, traders were pricing in a 92% chance of a rate increase at the Federal Open Market Committee’s meeting this week, up from 85% before the data.
Gains were broad-based, though the utilities index, which fell sharply earlier in the week and lost 1.2% for the period, was the day’s best-performing sector, ending up 0.8%.
At the same time, the S&P financial index, which has risen sharply on prospects of further rate hikes, ended flat, and strategists said the market has likely already priced in a March rate move.
“The strong [payrolls] number was a welcome surprise. It was a confirmation labor markets are holding up,” said Jeffrey Kravetz, regional investment director at the Private Client Reserve of US Bank. “The reaction is not huge because the market was expecting a good number.”
The Dow Jones Industrial Average ended up 44.79 points, or 0.21%, at 20,902.98, the S&P 500 gained 7.73 points, or 0.33%, to 2,372.6 and the Nasdaq Composite added 22.92 points, or 0.39%, to 5,861.73.
For the week, the Dow was down 0.5%, the S&P 500 was down 0.4% and the Nasdaq was down 0.2%.
Friday marked the 50th day of Donald Trump’s US presidency. Since he took office, the Dow has broken above 21,000 and the S&P 500 has crossed $20 trillion in market value on bets he would usher in tax cuts, simpler regulations and higher infrastructure spending.
Still, the lack of detail on Trump’s plans and other issues have helped temper the post-election rally, along with valuations that some consider lofty.
“In the short term we’re a little bit cautious [in stocks] because valuations are stretched. But as long as the economic data keeps improving and without inflation being an issue, any weakness becomes an opportunity to add [to equity longs],” said Sameer Samana, global quantitative and technical strategist at Wells Fargo Investment Institute in St. Louis.
Shares of US hospital operators fell a day after the Republican plan backed by Trump to overhaul Obamacare cleared its first hurdles in Congress.
While passage of the bill remains uncertain, some analysts believe the bill will go through. Tenet Healthcare shares fell 5.3%.
Finisar Corp. shares fell 22.7% after the network equipment maker gave disappointing revenue and profit forecasts for the current quarter.
On Friday, the Bank of Israel set its representative rate for the US dollar at NIS 3.6780, for the British pound at NIS 4.4727, for the Canadian dollar at NIS 2.7238, for the Australian dollar at NIS 2.7652, and for the South African rand at NIS 0.2762. The bank set the representative rate for the euro at NIS 3.9012 and for 100 yen at NIS 3.1860.