U.S. Stocks Turning In Mixed Performance Following Upbeat Jobs Data

Stocks have moved in opposite directions in morning trading on Friday following the release of the closely watched monthly jobs report. While the Dow and the S&P 500 have reached new record intraday highs, the Nasdaq is pulling back off yesterday’s record closing high.

Currently, the major averages continue to turn in a mixed performance. The Nasdaq is down 56.76 points or 0.4 percent at 14,838.35, but the Dow is up 115.16 points or 0.3 percent at 35,179.41 and the S&P 500 is up 5.26 points or 0.1 percent at 4,434.36.

The mixed performance on Wall Street comes as better than expected jobs data has added to economic optimism but also raised concerns about the outlook for monetary policy.

Before the start of trading, the Labor Department released a report showing non-farm payroll employment spiked by 943,000 jobs in July after surging by an upwardly revised 938,000 jobs in June.

Economists had expected employment to jump by 870,000 jobs compared to the addition of 850,000 jobs originally reported for the previous month.

The stronger than expected job growth was partly due to sharp increases in employment in leisure and hospitality and local government education, which shot up by 380,000 jobs and 221,000 jobs, respectively.

Reflecting the strong job growth, the unemployment rate slid to 5.4 percent in July from 5.9 percent in June, falling to its lowest level since March of 2020. Economists had expected the unemployment rate to dip to 5.7 percent.

Last week, Federal Reserve Chair Jerome Powell indicated further progress was needed in labor market recovery before the central would consider scaling back stimulus.

“We had thought that continued slow progress on the employment recovery would see the Fed hold off tapering its asset purchases until early next year,” said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He continued, “But with Board members Richard Clarida and Christopher Waller both recently suggesting a run of stronger jobs growth would be enough to meet the threshold of ‘substantial further progress,’ the risks may now be titled towards that process beginning sooner than we had expected.”

Banking stocks have moved sharply higher in morning trading, with the KBW Bank Index surging up by 2.4 percent to its best intraday level in over a month.

Significant strength has also emerged among oil service stocks, as reflected by the 1.5 percent gain being posted by the Philadelphia Oil Service Index. The strength in the oil service sector comes despite a modest decrease by the price of crude oil.

On the other hand, gold stocks have shown a substantial move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 3.1 percent.

The sell-off by gold stocks comes amid a nosedive by the price of the precious metal, with gold for December delivery plunging $43.10 to $1,765.80 an ounce.

Biotechnology stocks have also come under pressure, resulting in a 1.6 percent drop by the NYSE Arca Biotechnology Index. The index is pulling back off its best closing level in almost two months.

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Friday. Japan’s Nikkei 225 Index rose by 0.3 percent, while China’s Shanghai Composite Index dipped by 0.2 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the French CAC 40 Index has climbed by 0.6 percent, the German DAX Index is up by 0.3 percent and the U.K.’s FTSE 100 Index is up by 0.1 percent.

In the bond market, treasuries have moved sharply lower following the better than expected jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 7.2 basis points at 1.289 percent.

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