S&P 500, Nasdaq at Record Highs as Job Gains Top Expectations

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By Yasin Ebrahim

Investing.com – The S&P 500 and Nasdaq climbed to record highs Friday, as a stronger jobs report strengthened optimism on the recovery and sent U.S. bond yields lower, paving the way for ride higher in tech stocks.

The rose 0.6% and remained close to its record intraday high of 4,3469.42. The climbed 0.46%, or 158 points, the Nasdaq was up 0.60% and had hit an intraday record high of 14,615.4.

The economy created in June, a sharp increase from the 583,000 in April, well ahead of economists’ forecast of 720,000.  It was the largest gain in 10 months.

”Labor shortages are still an issue, but employers seem to be adjusting to the new reality and finding ways to attract workers with higher wages and/or sign-on bonuses,” Jefferies (NYSE:) said in a report.

Average hourly earnings climbed 0.3% in June increase in wages, but that was “distorted by disproportional job gains in leisure & hospitality and retail,” Jefferies added. “After adjusting for industry mix shifts, wages rose by 0.5% month-on-month in June, and are up 4.5% year-on-year.”

The expected increase in the wages will likely boost inflation and may lead to the tightening its monetary policy sooner than expected.

“If this trend does materializes this will be a key factor that will mean inflation stays elevated for even longer. We believe headline inflation will stay above 4% well into 2022 and take the view that it is increasingly probable the Federal Reserve will end up raising interest rates in 2022,” ING said.

U.S. bond prices, which trade inversely to yields, shrugged off the prospect of the sooner rather than later monetary policy, to trade lower. Falling bond yields, the ally of the stocks with higher valuations, helped lift tech stocks. 

Apple (NASDAQ:) and Microsoft (NASDAQ:) Alphabet (NASDAQ:) Amazon.com (NASDAQ:) and Facebook (NASDAQ:), which together make up about quarter of the S&P 500 weighting were up more than 1%.

Energy, meanwhile, clawed back some of its gains from a day earlier as investors looked ahead to a production decision from OPEC+ following a delay.  

OPEC and non-OPEC ministers kicked off their meeting Friday, which was delayed by one day, after the United Arab Emirates was reported to have made a last-minute objection to a preliminary agreement struck by Saudi Arabia and Russia on Thursday.

In other news,  Lordstown Motors (NASDAQ:) fell 8% on reports that the The Justice Department is investigating the company. The probe followed an investigation from the Securities and Exchange Commission into the company concerning claims by a short seller that the company misled investors.

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