U.S. stocks closed solidly higher Friday, helping the three main benchmarks book a second straight session of gains after a read on the labor market came in stronger than expected, supporting the thesis that economic fundamentals remain healthy despite trade-war anxieties.
What are the main benchmarks doing?
The Dow Jones Industrial Average DJIA, +0.41% rose 99.74 points, or 0.4%, to 24,456.48, with the blue-chip benchmark rallying by as many as 164 points at its best levels Friday. The S&P 500 index SPX, +0.85% gained 23.21 points to 2,759.82, a gain of 0.9%. The Nasdaq Composite Index COMP, +1.34% advanced by 101.96 points, or 1.3%, to 7,688.39.
All 11 primary S&P 500 sectors finished higher, with the health-care sector producing the biggest gainer, up 1.5% as Biogen enjoyed its best day in 14 years. The technology sector rose 1.2%.
For the week, the Dow returned 0.8%, the S&P rose 1.5%, while the Nasdaq gained 2.4%.
What’s driving markets?
The U.S. created 213,000 new jobs in June, above the 200,000 that had been expected, while the readings for May and April were also revised higher. Separately, the unemployment rate rose to 4% from 3.8%, which could reflect a higher participation rate, as well as an increase that might be tied to the end of the school year.
Separately, the nation’s trade deficit shrank 6.6% in May to a 19-month low, just a month before the first wave of U.S. tariffs on foreign goods in a broadening dispute over unfair trade practices.
On the political front, the Trump administration officially imposed tariffs on $34 billion of Chinese imports at midnight Eastern Time, and Beijing implemented tariffs on the same value in U.S. goods, as promised.
For weeks, stock markets have stuck in a tight trading range, amid concerns that a global trade war is developing and could weigh on economic growth.
What are strategists saying?
“Perfect is the word for the jobs report. It was superb, literally nothing wrong with it,” said Phil Orlando, chief equity market strategist at Federated Investors. “Not only was the headline number better than expected, but there were positive revisions for the previous months. Meanwhile, the rate of unemployment went up because of the growing participation rate, while at the same time wage inflation went down a tick. So we have a strengthening economy, with a strengthening labor market, with no runaway inflation. That’s all extremely positive for the equity market.”
Orlando said, “we absolutely expect volatility” to remain elevated as the trade outlook is uncertain, though he believed there was a long-term positive to a lower trade deficit. “The market should absolutely be nervous about what’s going on, but the underlying fundamentals in the market are still strong, and that should help us see a rally going into the end of the year,” he said.
What stocks are in focus?
Biogen Inc. BIIB, +19.63% jumped nearly 20% after it announced positive results from a Phase 2 trial for an Alzheimer’s treatment. The surge represented its best daily gain since February of 2004, according to WSJ Market Data Group. The iShares Nasdaq Biotechnology ETF IBB, +3.78% one of the most popular ways for investors to get exposure to the broad biotech space, jumped 3.8%.
JPMorgan Chase & Co. JPM, +0.33% said it had no plans to buy intoDeutsche Bank DB, +2.96% after reports that the troubled German lender had caught the attention of potential buyers. Shares of JPMorgan closed up 0.3% while U.S.-listed shares of Deutsche Bank slipped by 0.1%.
Square Inc. SQ, +3.57% rose 3.6%. A BTIG analyst reiterated his sell rating on the stock, saying that the company’s withdrawal of a banking-license application “highlights riskiness of dependence on credit to spur growth.”
Qualcomm Inc. QCOM, +0.80% said it was extending its cash tender offer for NXP Semiconductor NV NXPI, +0.74% for at least the 28th time it has done so in the past year and a half. Shares of Qualcomm were both up by finished 0.8% higher.
Alibaba Group Holding Ltd. BABA, +2.88% rose 2.9%. The most bullish analyst to cover the firm reiterated his optimistic view, although he trimmed his near-term revenue forecast.
What are other markets doing?
The ICE U.S. Dollar Index DXY, -0.46% sank 0.5%, while China’s Shanghai Composite SHCOMP, +0.49% finished up by 0.5% on Friday, paring its weekly drop to 3.5%.
European stocks SXXP, +0.20% finished higher, as gold futures GCQ8, -0.23% settled 0.2% lower. U.S. oil futures CLQ8, +1.34% closed up 1.2% at $73.80 a barrel.
