The S&P 500 and Nasdaq registered consecutive weekly gains, while U.S. stocks closed mostly higher on Friday. The Dow Jones Industrial Average and S&P 500 saw modest increases, bolstered by rising Treasury yields in response to a fresh report on August’s job market performance. U.S. markets will be closed on Monday for Labor Day.
Here’s how the stock indexes performed:
- The Dow Jones Industrial Average (DJIA) rose by 115.80 points, or 0.3%, closing at 34,837.71.
- The S&P 500 (SPX) increased by 8.11 points, or 0.2%, finishing at 4,515.77.
- The Nasdaq Composite (COMP) dipped by 3.15 points, or less than 0.1%, ending at 14,031.81.
For the week, the Dow climbed by 1.4%, the S&P 500 advanced by 2.5%, and the Nasdaq gained 3.2%, according to Dow Jones Market Data. The S&P 500 recorded its most significant weekly gain since the week ending June 16.
Market Factors: U.S. stocks closed mostly higher as investors evaluated the latest nonfarm payrolls report ahead of the Labor Day weekend.
The Labor Department reported that the U.S. economy added 187,000 jobs in August, surpassing economist expectations of a 170,000 gain but still indicating a slowdown in job growth. This slowdown is likely to be welcomed by the Federal Reserve. However, the unemployment rate increased from 3.5% in July to 3.8%.
The nonfarm payrolls report suggests that economic growth remains solid, raising hopes of a soft landing. Nevertheless, some caution that the Fed’s job of curbing inflation through higher interest rates is not yet complete.
Average hourly earnings increased by 0.2% last month, resulting in a 4.3% wage growth over the past year. Despite slowing wage growth, the potential for another rate hike from the Fed in November remains on the table due to still elevated inflation.
Rising Treasury yields put pressure on technology and growth stocks during the trading session. The yield on the 10-year Treasury note jumped to 4.173%, while two-year yields edged up to 4.866%.
After a strong week for technology stocks, some profit-taking occurred, with investors shifting into cyclical sectors and small-cap equities. The S&P 500’s tech sector closed slightly higher, recording a weekly gain of 4.4%.
Remarks by Cleveland Fed President Loretta Mester and the ongoing debate about the Fed’s monetary policy also influenced market sentiment. Federal-funds futures suggested that the Fed would maintain its benchmark rate at a targeted range of 5.25% to 5.5% at its upcoming policy meeting.
In other economic news, a key index measuring U.S. manufacturing activity rose to 47.6% in August, exceeding expectations. However, a reading below 50% indicates a contraction in activity.
The impact of the Fed’s monetary tightening measures is still being felt in the economy, leading some experts to exercise caution about the stock market’s potential for further gains. The S&P 500 has already surged by 17.6% year-to-date.
Trading volume on Friday was expected to be light due to the upcoming Labor Day weekend.
Notable company developments included Walgreens Boots Alliance’s CEO stepping down, Dell Technologies posting strong results, Broadcom delivering a lackluster revenue forecast, Lululemon Athletica reporting mixed same-store sales but raising its full-year outlook, and Tesla reducing prices for its Model S and Model X cars in China.
