The Nasdaq Composite rose in choppy trading on Friday as investors reacted to a stronger-than-expected jobs report that will likely keep the Federal Reserve on track for its aggressive rate hikes.
The Nasdaq gained 0.1%, while the S&P 500 and Dow Jones Industrial Average closed slightly lower.
Nonfarm payrolls increased 372,000 in the month of June, better than the 250,000 Dow Jones estimate and continuing what has been a strong year for job growth, according to data Friday from the Bureau of Labor Statistics.
All three major averages finished up for the week. The jobs report and a recent decline in commodities prices have made a have made a so-called “soft landing” for the U.S. economy a bit more likely, boosting stocks, said Yung-Yu Ma of BMO Wealth Management.
“Some of what were very acute recession fears have probably backed off a little bit. … I think the market started to accept that a little more as a possibility this week,” Ma said.
Defensive-oriented health care consumer staples stocks were among the outperformers. Centene Corp. gained more than 3%, and Moderna added 2.2%.
The energy sector was also strong, with Devon Energy and Valero adding roughly 2%.
Treasury yields jumped sharply after the jobs data was released, which may have limited gains for stocks. The 2-year Treasury yield held above the 10-year Treasury yield, an inversion that is seen by many as a recession indicator.
Though the jobs report was a positive sign for the state of the U.S., many investors believe that will allow the Federal Reserve to aggressively fight inflation with rate hikes in the coming months.
“This report is good news is bad news for the market today…you couldn’t ask for anything better from this jobs report in terms of broad gains, low unemployment, the number was above expectations,” said Michael Arone of State Street Global Advisors. “Wages were growing but at a slower rate. …That was a good thing, and yet the markets kind of shrugged their shoulders here because at the end, the conclusion is the Fed is going to go by 75 basis points.”
Commodities stocks underperformed, continuing recent volatility in those sectors. Mining stock Freeport-McMoRan dipped 2.4%.
Travel stocks were down for the day, with Caesars Entertainment falling more than 4% and Carnival Corp. falling about 3%.
Twitter fell more than 4% and was among the worst performers in the S&P 500 after the Washington Post reported that Elon Musk was planning to back out of his takeover offer.
GameStop fell about 5% as the company fired its chief financial officer and said it would lay off employees as part of a turnaround plan. The stock notched a 15% gain in the prior session after the video game retailer announced a 4-for-1 stock split.
Shares of WD-40 fell 13% after the company reported shrinking margins during its fiscal third quarter, citing macroeconomic pressures.
The second-quarter earnings season begins in earnest next week, with reports due out from most major banks.
