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TODAY IN THE USA
Stocks closed higher on Wall Street on Friday, with the S&P 500 gaining for the seventh day in a row and reaching a new all-time high.
After a survey showing the nation’s job market was stronger than predicted last month, the Dow Jones Industrial Average and Nasdaq both gained. It’s an indication that more people are returning to work, though there’s still a long way to go before the labor force reaches full strength. According to some investors, this should keep the Federal Reserve on track to continue supporting the economy for a little longer. Treasury yields remained flat to slightly lower. The S&P 500 index rose 0.8 percent to 4,352.34 on Friday. At 34,786.35, the Dow gained 152.82 points, or 0.4 percent. The Nasdaq Composite increased 0.8 percent to 14,639.33, a new high. The largest settlement ever reached by Robinhood: In a world-record settlement, a brokerage was fined $70 million for disruptions and deceiving consumers. After a US government report showed companies employed 850,000 more workers than they terminated last month, indexes surged as soon as trading began. It was a better reading than the 700,000 economists predicted, and it marked an acceleration after a number of months of slow growth. However, the job market has a long way to go before it regains its pre-pandemic vitality. Economists interpreted the findings as an indication that as more people get vaccinated and the pandemic fades, workers will return to the workforce. Perhaps more importantly for markets, some analysts believe the statistics indicate the Federal Reserve can continue on its current path, keeping interest rates low to sustain the economy for a lot longer. Following the jobs report, Treasury yields were flat to lower, with the 10-year Treasury yield falling to 1.43 percent from 1.48 percent late Thursday. Low interest rates help to drive up the price of all kinds of equities, but they’re especially helpful for high-growth companies whose stock prices could otherwise appear to be too high. (Photo courtesy of Getty Images) This helped lift a number of important tech-related equities higher on Friday. Microsoft gained 2.2 percent, while Apple gained 2%. Because of their size, those companies’ stock fluctuations have a greater impact on indices, and they have helped compensate for losses by energy producers, financial firms, and others. The Fed has stated that it will maintain rates low to stimulate the job market, and Friday’s report signaled to numerous investors that job growth or inflation were not high enough to change the Fed’s approach. Workers’ average hourly salaries were 3.6 percent higher in June than a year ago, although the increase from May was 0.3 percent lower than economists’ estimates. “Perhaps now that wage growth and inflation have peaked, we can move past fears of a wage-price doom-loop,” said Brian Jacobsen, senior investment strategist at Wells Fargo Asset Management. The Fed has insisted that the current bout of increased inflation is only temporary, giving it more discretion to keep its economic stimulus in place. Many investors believe the Fed will announce a reduction in asset purchases later this year, well ahead of estimates that short-term rates will rise from their record lows in 2022 or 2023. However, if job growth or inflation proves to be greater and more consistent than predicted, the Fed may be forced to accelerate its rate hikes. “The Fed wants to run the economy as hot as possible while keeping the unemployment rate as low as feasible,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, explained. “Inflation may run high, which could hasten tapering plans, but I believe they will continue to wait a long time to raise rates.” Virgin Galactic’s stock jumped 4% after the company announced plans to perform a test spaceflight on July 11 with its founder Richard Branson on board. Didi, a Chinese ride-hailing service, had its stock drop 5.3 percent after China’s internet authority announced it had begun an inquiry into the firm to defend national security and the public interest. On Wednesday, its stock began trading in New York. Both Europe and Asia’s stock markets were mixed. The stock markets in the United States will be closed on July 4th in commemoration of Independence Day. https://www.usatoday.com/story/money/markets/2021/07/02/stocks-again-set-records-following-encouraging-jobs-data/7846601002//n
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