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U.S. stocks closed Friday after record highs, after June job data were better than expected, indicating the world’s largest economy was emerging from a pandemic to a robust pace.
The American labor market added 850,000 positions last month, exceeding economists ’expectations for 720,000 new jobs and substantially above the revised May figure of 583,000.
Wall Street’s broad S&P 500 and the high-tech Nasdaq Composite, based on records reached earlier this week, with the two benchmarks closing 0.8%. The breakthrough marked the seventh consecutive day of trading, the S&P 500 has closed with a record, the longest streak since 1997.
The increase brought the weekly gain of the S&P 500 to 1.7% and just under 2% on the Nasdaq. The latter’s stronger advance reflected investors ’continued shift towards growth and technology stocks, which had been delayed earlier this year when portfolio managers opted for shares of companies linked to the reopening. of the country.
The employment reading was not so strong as to suggest that the U.S. Federal Reserve would be tempted to curb its pandemic-era stimulus that has underpinned asset prices during the health crisis.
“U.S. job figures could not have given better news on Wall Street,” said Danni Hewson, financial analyst at AJ Bell, who said this was a “Goldilocks” time for financial markets. ” neither too hot nor too cold. ”
“There are enough new jobs to confirm that the economy is up and running, [but] unemployed enough to give a strong hug to the Fed’s current strategy, ”he added.
The rise in shares was accompanied by a moderate rise in government bonds. The yield on the 10-year US Treasury note fell 0.03 percentage points to 1.42%.
Although the ten-year yield has risen by 0.91% at the start of the year, it has fallen from the high of 1.77% reached in March. Investors have dropped theirs inflation expectations during the last month and a half, which has affected all markets.
Lower inflation projections have amplified the attractiveness of growth and technology stocks whose future benefits appear stronger when rates are low.
Technology stocks within the S&P 500 gained more than 3% this week, their best weekly release since April. Shares of Apple and Microsoft rose more than 4 percent during the week, while chip maker Advanced Micro Devices rose more than 10 percent.
“What works in the market is clearly influenced by rates,” said Jonathan Golub, a strategist at Credit Suisse. “And this is influenced by this belief that inflation will not be persistently high and, to the extent that the Fed influences this decision, it will have an influence on the markets.”
In Europe, the yield of the German equivalent Bund fell 0.03 percentage points, minus 0.24%. The Stoxx Europe 600 across the region and the Frankfurt Xetra closed 0.3%, while the London FTSE 100 was flat.
“We believe the European market is really benefiting from the depreciation of the euro,” said Bastien Drut, CPR Asset Management’s main thematic macro-strategy, referring to a one-month dollar rise against peers. The single currency, which rose slightly to $ 1.1863 on Friday, fell more than 3% against the green dollar since early June.
While some decision-makers at the US central bank are beginning to talk more openly about the need to prepare for the gradual liquidation of the pandemic-era stimulus, in the eurozone the European Central Bank has maintained a more voussoir stance, reflecting the different rates of recovery on each side of the Atlantic.
Oil prices stood near their highest level for two and a half years after officials said OPEC + meeting of the major oil-producing nations struggled to reach an agreement on production output. Brent crude, the world’s leading oil company, and West Texas Intermediate, both, settled above $ 75 a barrel.
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