By Sue Chang and Mark DeCambre, MarketWatch
Oil companies fall as crude slides again; silver suffers flash
crash
U.S. stock indexes advanced Friday to close out the first week
of July higher after an employment report showed the U.S. added
222,000 jobs in June, representing the second-largest job haul of
the year and underscoring that the labor market remains
healthy.
The Labor Department said unemployment ticked up to 4.4% from
4.3%
(http://www.marketwatch.com/story/us-adds-222000-jobs-in-june-as-hiring-surges-2017-07-07).
Economists polled by MarketWatch had forecast a rise of 180,000 and
unemployment to hold at 4.3%.
A strong rebound in beleaguered tech stocks also helped major
benchmarks to secure a foothold in positive territory.
The Dow Jones Industrial Average climbed 94.30 points, or 0.4%,
to close at 21,414.34, finishing the week 0.3% higher.
The S&P 500 index rose 15.43 points, or 0.6%, to 2,425.18,
edging up 0.1% for the week.
The tech-laden Nasdaq Composite Index rallied 63.61 points, or
1%, to end at 6,153.08 for a weekly gain of 0.2%.
The strong payroll data "will augment the Fed's decision to
begin balance sheet reduction sooner than later," Charlie Ripley,
investment strategist at Allianz Investment Management US, said in
a note. "On balance, the labor market continues to be solid and
despite the softer inflation data as of late, the solid employment
data should keep the Fed on course for policy normalization."
The government employment report also indicated that readings
for jobs in May and April were better than previously reported,
perhaps adding more support for the Federal Reserve to continue its
plan to normalize monetary policy, lifting rates at least once more
in 2017.
"[A headline reading of] 222,000 and a 16,000 upward revision to
last month are a lot better than people were expecting," Colin
Cieszynski, chief market strategist at CMC Markets, told
MarketWatch. "Wages were slightly below expectations which has
knocked down [the U.S. dollar] and boosted the Dow," he said.
Average hourly pay rose 0.2% to $26.25 an hour in June, below
expectations for a 0.3% gain. Wages have climbed a modest 2.5% in
the past 12 months, but pay is still below the usual gains at this
point in a cycle of expansion.
Despite lackluster wage growth, which is viewed as a proxy a for
stubbornly low inflation, Cieszynski said he viewed the climb in
wages as strong and unlikely to change the Federal Reserve's
monetary-policy trajectory as it looks to lift interest rates at
least once more in 2017 and unwind its $4.5 trillion asset
portfolio.
On Thursday, the Nasdaq fell 1%
(http://www.marketwatch.com/story/us-stock-futures-pull-lower-as-investors-keep-searching-for-cues-2017-07-06)
as investors continued to rotate out of battered technology names.
The S&P 500 and Dow average slid 0.9% and 0.7%, respectively,
as bonds dropped sharply, sending yields higher.
"The rising yields are a reaction to the shift in emphasis from
central banks away from their long held view that advocates
ultraloose monetary policy," said Richard Perry, market analyst at
Hantec Markets, in a note. "However, can the data back this
up?"
The yield on 10-year U.S. Treasury notes rose to 2.38%, around
its highest in eight weeks.
J.J. Kinahan, chief strategist at TD Ameritrade, said Friday's
action, with stocks climbing at the same time as government bond
yields, could be viewed as a healthy sign for Wall Street.
Thursday's dynamic of bond prices sinking, pushing yields higher,
as stocks also declined runs against the grain of the natural
relationship between stocks, perceived as risky and haven bonds,
which are typically bought as equities tumble.
"Yields are going back higher and we are finally starting to see
a little separation between bonds and stocks, and we'll see if this
relationship stays because the traditional relationships have been
screwed up [due to central-bank interventions]," he said.
Read:U.S. forecast to add 180,000 jobs in June, but don't be
surprised if hiring falls short
(http://www.marketwatch.com/story/us-forecast-to-add-180000-jobs-in-june-but-dont-be-surprised-if-hiring-falls-short-2017-07-06)
Economics and G-20: The Fed, in its semiannual monetary policy
report
(http://www.marketwatch.com/story/fed-sticks-to-script-ahead-of-yellens-testimony-on-capitol-hill-2017-07-07),
forecast a gradual hike in interest rates and a winddown of the
balance sheet as the economy continues its steady pace of
expansion. The report comes ahead of Fed Chairwoman Janet Yellen's
testimony on Capitol Hill next week.
Meanwhile, President Donald Trump met with Russian counterpart
Vladimir Putin for the first time since taking office on the
sidelines of the two-day G-20 leaders' gathering in Hamburg,
Germany. The meeting came as Trump's administration is being probed
about possible collusion with Russia in its widely suspected
interference in the U.S. election.
As the leaders arrived on Thursday, police clashed with
thousands of protesters
(http://www.marketwatch.com/story/welcome-to-hell-protestors-police-clash-at-g-20-summit-2017-07-07)
as around 12,000 people joined in a protest dubbed "Welcome to
hell."
Oil blues: In a volatile week for oil prices, crude oil slumped
2.8% on ongoing concerns
(http://www.marketwatch.com/story/oil-prices-drop-1-volatile-session-2017-07-07)
that production cuts led by the Organization of the Petroleum
Exporting Countries aren't enough to balance the oil market.
Read:OPEC can't save oil market alone--the U.S. has to step in,
says Morgan Stanley
(http://www.marketwatch.com/story/opec-cant-save-oil-market-alonethe-us-has-to-step-in-says-morgan-stanley-2017-07-06)
Stocks to watch: Oil-related companies fell with shares of
Transocean Ltd. (RIG) down 2%, Apache Corp.(APA) lost 1.4% and
Noble Energy Inc.(NBL) dropped 0.6%.
Shares of Qualcomm Inc.(QCOM) gained 1% as the company on
Thursday filed a complaint against Apple Inc
(http://www.marketwatch.com/story/qualcomm-steps-up-fight-against-apple-2017-07-06-164853632).(AAPL),
saying the tech giant infringed several of Qualcomm's patents on
wireless technology in iPhones and iPads. Apple shares rose 1%.
Shares of Campbell Soup Co.(CPB) rose 0.2% as it said late
Thursday that it would buy organic-soup company Pacific Foods for
$700 million
(http://www.marketwatch.com/story/campbell-soup-to-acquire-pacific-foods-for-700-million-2017-07-06).
Synchronoss Technologies Inc.(SNCR) rallied 4% after its board
late Thursday said it would explore strategic alternatives,
including a sale of the wireless-software company.
A popular way to bet on home builders, the SPDR S&P
Homebuilders ETF (XHB), led by LGI Homes Inc. (LGIH) and D.R.
Horton Inc. (DHI), posted its best daily gain since March 1, on the
heels of the employment report that showed job creation in the
construction sector.
Other markets: Stocks in Asia extended losses
(http://www.marketwatch.com/story/asia-pacific-markets-slump-following-losses-in-us-europe-2017-07-06),
while European stocks finished mostly lower
(http://www.marketwatch.com/story/european-stocks-fall-on-stumble-in-oil-prices-central-bank-concerns-2017-07-07).
Bond yields in Europe were relatively stable, with borrowing
costs on German paper generally flat at 0.576%.
Silver settled 3.5% lower to $15.42 an ounce. The metal earlier
in the session tanked almost 10% to $14.34 in a flash crash
(http://www.marketwatch.com/story/silver-futures-sink-10-rebound-in-flash-crash-2017-07-07)
that likely was due to a trading error. Gold finished down 1.1% to
$1,209.70 an ounce.
--Sara Sjolin contributed to this article.
(END) Dow Jones Newswires
July 07, 2017 17:00 ET (21:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.