Wall Street closed to a new record high on Friday while U.S. Treasuries rose as traders returned from a midweek holiday to receive nonfarm payrolls data that further supported the Federal Reserve’s interest rate cut.
The market was closed Thursday for Independence Day.
Benchmark S&P 500 (SP500) Increased by 0.54% The Nasdaq Composite Index (COMP:IND) Advanced 0.90% The Dow Jones Industrial Average closed at 18,352.76 points.DJI) Increased by 0.17% It ended at 39,375.87 points.
Eight of the S&P’s 11 sectors ended in the positive.
This week, S&P (SP500) Increased by 1.95%Nasdaq (COMP:IND) 3.50% increaseDow (DJI) 0.64% added.
“Trading this week was mostly done by machines and novices as usual, with larger investors still deciding between Palmer and Lafitte as they close out a strong week in the Hamptons in July, so lazy bulls dominated today. Monday will give us an idea of what institutional volumes are thinking in the third quarter,” Alex King, investment group leader at Cestrian Capital Research, told Seeking Alpha.
Before the market opened on Friday, the U.S. Bureau of Labor Statistics said job growth slowed in June and revised down May figures. The unemployment rate also rose to 4.1% from 4.0%. See employment data in chart.
A highly resilient labor market, combined with inflation, is one of the main reasons the Fed has kept interest rates unchanged and is hesitant to begin easing monetary policy.
“It’s time for the Fed to cut interest rates. That’s the message of today’s June jobs report. Unemployment remains low but is rising steadily. Job and wage growth remains strong but is slowing steadily. The Fed has accomplished its full employment mandate,” Mark Zandi, chief economist at Moody’s Analytics, said on X (formerly Twitter).
“This follows an excellent report on inflation last week, which shows the Fed’s inflation target is in clear sight. Harmonized inflation is firmly below target, making a restrictive fed funds rate of 5.5 percent difficult to justify,” Zandi added.
Market participants slightly increased their expectations for a 25 basis point Fed rate cut in September following the nonfarm payrolls report, with the probability now at about 75% from about 68% yesterday, according to the CME FedWatch tool.
Turning to the bond market, there was a buying frenzy in U.S. Treasuries, sending yields lower: the long-term 30-year yield (US30Y) fell 6 basis points to 4.48%, the 10-year yield (US10Y) fell 9 basis points to 4.28%, and the interest-rate-sensitive short-term 2-year yield (US2Y) fell 12 basis points to 4.61%.
See how Treasury yields have performed across the curve on the Seeking Alpha Bonds page.
Among active stocks, Macy’s (M) soared nearly 10% after a group of investors led by Arkhouse Management and Brigade Capital raised their takeover bid for the department store chain to about $6.9 billion.
News from across the Atlantic also grabbed attention earlier in the day. The UK general election ended with a landslide victory for the Labour Party, bringing an end to 14 years of Conservative rule. The British pound rose 0.4% against the US dollar to $1.2806 (GBP:USD).
