Stocks climb on Wall Street following encouraging jobs data

By STAN CHOE

NEW YORK (AP) — Stock indexes are ticking higher on Wall Street Friday after a report showed the nation’s job market was even stronger last month than expected.

The S&P 500 was up 0.3% in morning trading and on pace for its seventh straight gain, though slightly more stocks were falling in the index than rising.

The Dow Jones Industrial Average was up 45 points, or 0.1%, at 34,679, as of 10:40 a.m. Eastern time. The Nasdaq composite was 0.3% higher and on track to set another record like the S&P 500.

Indexes climbed as soon as trading opened, after a U.S. government report said employers hired 850,000 more workers than they cut last month. It was a healthier reading than the 700,000 economists expected and an acceleration following a couple months of disappointing growth. But the job market still has a ways to go before it gets back to its strength from before the pandemic.

Economists took the report as a sign that workers will indeed come back into the labor force as more people get vaccinated and the pandemic eases. Perhaps more importantly for markets, some said the numbers likely mean the Federal Reserve can stay on the course it’s set, keeping interest rates low for a while longer to support the economy.

Treasury yields were flat to lower following the jobs report, and the yield on the 10-year Treasury fell to 1.43% from 1.48% late Thursday.

Low interest rates help drive up prices for all kinds of stocks, but they provide particularly powerful fuel for high-growth companies whose prices may otherwise look expensive.

That helped push several influential tech-oriented stocks higher Friday. Microsoft gained 1.3%, and Apple rose 1%. Because those companies are so big, their stock movements carry extra heft for indexes, and they helped make up for losses by energy producers, financial companies and others.

About 53% of stocks in the S&P 500 were falling, as were the smaller stocks in the Russell 2000 index, which dropped 0.9%.

The Fed has said it will keep rates low to help strengthen the job market, and Friday’s report suggested to several investors that growth in jobs or inflation wasn’t high enough to alter its course. Average hourly wages for workers were 3.6% higher in June than a year ago, but the rise from May was slightly below economists’ expectations at 0.3%.

“Maybe with wage growth and inflation having peaked, we can get past the peak fears of some sort of wage-price doom-loop,” said Brian Jacobsen, senior investment strategist, Wells Fargo Asset Management.

The Fed has been insisting that the higher inflation hitting the economy now will be only temporary, which would give it more leeway to keep its support for the economy in place. Many investors expect it to announce a pullback in its bond purchases later this year, well before expectations for the Fed to move short-term rates off their record low in 2022 or 2023.

If job growth or inflation is stronger and more persistent than expected, though, it could force the Fed to move up its timetable and raise rates more aggressively.

Virgin Galactic flew 9.8% higher after it said it hopes to launch a test spaceflight on July 11, with its founder Richard Branson on board.

U.S.-listed shares of Didi, a Chinese ride-hailing service, slumped 6.2% after China’s internet watchdog said it launched an investigation into the ride-hailing company to protect national security and public interest. Its shares began trading in New York on Wednesday.

In Europe, indexes were mixed. Germany’s DAX returned 0.2%, and France’s CAC 40 slipped 0.1%, while the FTSE 100 in London was barely changed.

Asian markets were also mixed, with Japan’s Nikkei 225 up 0.3% and South Korea’s Kospi nearly flat. Markets in Shanghai and Hong Kong fell more sharply, down 1.8% or more.

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AP Business Writer Yuri Kageyama contributed.

A currency trader walks near a screen showing the Korea Composite Stock Price Index (KOSPI) at a foreign exchange dealing room in Seoul, South Korea, Friday, July 2, 2021. Shares were mostly higher in Asia on Friday, though markets in Shanghai and Hong Kong declined a day after the Chinese Communist Party marked its centenary with tough talk by Chinese President Xi Jinping. (AP Photo/Lee Jin-man)

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