FILE – A person walks past an electronic stock price board displaying financial indexes including Japan’s Nikkei Stock Average (in green) at a securities firm in Tokyo, June 27, 2024. Asian stocks were mostly lower on Friday, July 5, after Europe had risen strongly overnight. U.S. markets were closed for the July 4th holiday. (AP/Shuji Kajiyama, File)
NEW YORK (AP) — U.S. stocks rose to yet another record high Friday after a highly anticipated jobs market report bolstered hopes that Wall Street interest rates may soon ease.
The S&P 500 rose 0.5%, hitting a third consecutive day of record highs after trading was closed on Thursday for Independence Day. The index has already broken 34 records this year and is up nearly 17%, but is still just over halfway there.
The Dow Jones Industrial Average rose 67 points, or 0.2%, and the Nasdaq Composite Index was 0.9% above its all-time high.
In the bond market, the move was more decisive. Treasury yields fell following the U.S. employment report. Companies hired more workers last month than economists expected, but the job gains still slowed from May’s. Moreover, the unemployment rate unexpectedly rose, worker wage growth slowed, and the U.S. government said employment numbers last month were lower than previously indicated.
Overall, the data reinforced Wall Street’s view that U.S. economic growth is slowing under the weight of high interest rates — just what investors are hoping would tame inflation and encourage the Federal Reserve to start cutting its key interest rate from its highest level in two decades.
The question is whether the economy can stay in this Goldilocks state — not too hot, not too cold — long enough for the Fed to accurately predict its next move. The hope is that the Fed will cut rates early and far enough to keep the slowdown from tipping into a recession, but not so low that inflation regains momentum and rises again.
For financial markets, the clearest takeaway from the jobs report is that the Fed is maintaining its outlook for a cut in its key interest rate later this year, likely in September and possibly as soon as December. The yield on the two-year Treasury note, which tracks closely with expectations of Fed action, fell to 4.60% from 4.71% late Wednesday.
The yield on the 10-year Treasury note, the backbone of the bond market, fell to 4.27% at Wednesday’s close, down from 4.36% and 4.70% in April, a notable move for the bond market and one that has helped support stocks.
Friday’s jobs report follows a wave of data pointing to a slowdown in the overall U.S. economy. Reports earlier this week showed business activity in both the U.S. service and manufacturing sectors contracted last month, weaker than economists expected. They also showed how lower-income American shoppers are still struggling to keep up with rising prices as credit card debt balances soar.
“The big question for long-term investors is whether the recession fears come true,” said Brian Jacobsen, chief economist at Annex Wealth Management. “We think a recession is unlikely this year or next, but that doesn’t mean the market doesn’t fear one.”
On Wall Street, gold miner Newmont rose 2.4%, the biggest gainer in the S&P 500. The company benefited from rising gold prices, which typically rise when interest rates fall. This is the flip side of a situation where interest rates rise and bond yields rise, which doesn’t provide any benefit to gold holders and could scare investors away from gold.
Gains in some big, influential stocks also helped support the market, despite declines across most of the S&P 500. Meta Platforms rose 5.9% and Apple added 2.2%.
Amazon rose 1.2% after Saks Fifth Avenue’s parent company announced a deal to buy Neiman Marcus Group for $2.65 billion. Amazon will hold a minority stake in the combined company.
The biggest losers on Wall Street were companies closely tied to cryptocurrency trading. Earlier this week, Bitcoin fell from nearly $63,000 to under $54,000 before recovering somewhat. The cryptocurrency’s value is now almost back to where it was in February.
Coinbase Global fell 0.6%, and Robinhood Markets dropped 1%.
Overall, the S&P 500 rose 30.17 points to 5,567.19, the Dow Jones Industrial Average rose 67.87 points to 39,375.87 and the Nasdaq Composite added 164.46 points to 18,352.76.
In international stock markets, London’s FTSE 100 index fell 0.5 percent after British voters ousted the Conservative Party and installed a new government in this week’s general election.
Britain has endured years of turmoil under Conservative governments that have left many voters pessimistic about the country’s future. Britain’s departure from the European Union was followed by the coronavirus pandemic and Russia’s invasion of Ukraine, which have hit the economy hard. Rising poverty and cuts to public services have led to discontent with a “broken Britain.”
In Asia, Japan’s Nikkei stock average topped 41,000 points early on Friday, surpassing the all-time high it hit on Thursday, but closed slightly lower.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
