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Wall Street Manages to Close Higher 08/07 16:07
Wall Street's big rally let off the accelerator on Friday, despite a
better-than-expected report on the U.S. job market, amid worries about
worsening U.S.-China tensions and whether Washington can deliver more aid for
the economy.
NEW YORK (AP) -- Wall Street's big rally let off the accelerator on Friday,
despite a better-than-expected report on the U.S. job market, amid worries
about worsening U.S.-China tensions and whether Washington can deliver more aid
for the economy.
The S&P 500 inched up 2.12 points, or 0.1%, to 3,351.28 to eke out a sixth
straight gain, after being down most of the day. It's back within 1% of its
record for the first time since February. The Dow Jones Industrial Average
added 46.50, or 0.2%, to 27,433.48.
Technology stocks took losses, though, on worries that China could retaliate
for President Donald Trump's latest escalation against Chinese tech companies.
The Nasdaq composite dropped 97.09, or 0.9%, from its record to 11,010.98. It's
a rare stumble for big tech stocks, which have soared on expectations they can
keep raking in profits regardless of the pandemic.
"The Chinese aren't going to take this lightly," said Quincy Krosby, chief
market strategist at Prudential Financial. "They've already suggested they
might take it to court. The point is the market is projecting we're going to
see a ratcheting up of tensions between the U.S. and China, and it could focus
on technology."
The day's headline economic report was an encouraging one for investors: The
U.S. job market strengthened by more last month than economists had forecast,
with employers adding 185,000 more jobs than the nearly 1.6 million that
investors expected to see. Analysts said they found some encouraging trends
throughout the report, such as a stronger-than-expected rise in average hourly
earnings.
"Yes, future employment data will likely slow due to more COVID-19
restrictions, but for now you have to be quite impressed with how far we've
come the last few months," Ryan Detrick, chief investment strategist for LPL
Financial, said in a statement.
Several areas of the market that tend to rise when investor upgrade their
expectations for the economy rallied.
Stocks of smaller companies climbed more than their bigger rivals, and the
Russell 2000 index of small-cap stocks jumped 24.56, or 1.6%, to 1,569.18.
Treasury yields also rose. Financial stocks, which have swung sharply with
prospects for the economy and interest rates, had the biggest gain of the 11
sectors that make up the S&P 500. Seven out of 10 stocks within the index rose
for the day.
Still, the job report also showed that hiring slowed in July after two
months of acceleration, and the job market remains far below where it was
before the pandemic.
Analysts said the better-than-expected jobs report may also have removed
some of the urgency from talks on Capitol Hill, where Congress and White House
officials have been negotiating on a hoped-for deal on more aid for the
economy. They had set an informal Friday deadline to reach the outlines of an
agreement, including benefits for unemployed workers, and Treasury Secretary
Steven Mnuchin came out of talks Friday saying no progress was made.
Mnuchin said Trump is considering executive orders to address some of the
issues without Congress, but critics question how much impact they would have.
Investors say Washington needs to act quickly because $600 in weekly
unemployment benefits from the federal government just expired. The economy has
shown signs of improvements since the spring but is still hobbling, and
concerns are rising that it could backtrack amid a resurgence in coronavirus
counts.
"The market clearly believes that a package is necessary to cushion the
downside of the pandemic-induced slowdown in the economy," Prudential
Financial's Krosby said. And even though last month's jobs gains were bigger
than expected, "it still suggests there's a long way to go to heal the labor
market."
Much of the market's focus was also on moves Trump made Thursday night. He
ordered a sweeping but vague ban on dealings with the Chinese owners of popular
social media apps TikTok and WeChat on security grounds.
China's government criticized the move as "political manipulation."
Tensions between the world's two largest economies have been escalating for
years, highlighted by the U.S.-China trade war that seemed to have reached at
least a temporary truce early this year. But tough talk has continued to flow,
with Trump keying in on TikTok in particular recently.
The escalating U.S.-China tensions helped send tech stocks in the S&P 500
down 1.6% Friday, more than quintuple the loss of any of the other 10 sectors
that make up the index.
Even Apple, whose stock has been nearly unstoppable through the pandemic,
slumped. It fell 2.3% for its first drop in eight days.
The yield on the 10-year Treasury rose to 0.56% from 0.53% late Thursday.
Gold slipped, a rare step back following its record-setting run as investors
seek safety amid a weak global economy, trade tensions and low interest rates.
An ounce of gold to be delivered in December lost $41.40 to settle at $2,028.00.
Benchmark U.S. crude fell 73 cents to settle at $41.22 per barrel. Brent
crude, the international standard, lost 69 cents to $44.40 a barrel.
In China, stocks in Shanghai lost 1%. The Hang Seng in Hong Kong dropped
1.6%, while Japan's Nikkei 225 slipped 0.4% and South Korea's Kospi added 0.4%.
In Europe, Germany's DAX returned 0.7%, and France's CAC 40 rose 0.1%. The
FTSE 100 in London added 0.1%.
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