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AUG 6 — The Dow and the S&P 500 scaled record highs today as shares in economy-linked sectors jumped following a solid rise in jobs in July, helping allay fears of the Delta variant impacting a nascent economic recovery.
Nonfarm payrolls increased by 943,000 jobs last month, a Labor Department report showed, amid demand for workers in the labor-intensive services industry. Economists were expecting 870,000 job additions.
“It’s exactly the kind of report that the market wanted, in that it is strong,” said Seema Shah, chief strategist at Principal Global Investors.
“It suggests that a labour market recovery is in play but also not so strong that it’s going to push forward the timings of the Fed tapering. That is goldilocks, that perfect mix of strong but not too strong.”
Seven of the 11 major S&P 500 sectors were higher in early trading, with financials, materials and energy leading the advance. The S&P 500 technology sector index fell 0.3 per cent.
The much-awaited jobs numbers dovetailed with data that showed a further decline in US unemployment claims last week and strong corporate earnings reports.
Although the three main indexes are set to end the week with nominal gains following a stellar corporate earnings season, fears of higher inflation resulting in a sudden tapering in monetary policy have hurt sentiment.
Focus now turns to a meeting of Federal Reserve leaders in Jackson Hole, Wyoming, to discuss policy and decide future stimulus strategy.
At 9:52 a.m. ET, the Dow Jones Industrial Average was up 134.15 points, or 0.38 per cent, at 35,198.40 and the S&P 500 was up 3.88 points, or 0.09 per cent, at 4,432.98.
The Nasdaq Composite was down 44.90 points, or 0.30 per cent, at 14,850.22, pressured by declines in growth stocks including, Apple Inc, Microsoft Corp and Amazon.com Inc, which fell about 0.5 per cent each.
On the earnings front, American International Group Inc rose 3.5 per cent as it beat second-quarter profit estimates yesterday.
Zynga Inc tumbled 17.3 per cent after issuing a disappointing forecast for bookings and announcing a potential acquisition worth over half a billion dollars.
US-listed shares of ride-hailing service Didi Global Inc added 3.1 per cent as Bloomberg News reported it was considering giving up control of its valuable data as part of efforts to resolve a Chinese regulatory probe.
Corteva Inc rose 6.4 per cent after raising its net sales forecast for the year.
Analysts expect second-quarter profit growth of 92.9 per cent for S&P 500 companies, according to IBES data from Refinitiv. Of the 427 companies in the index that have reported earnings so far, 87.6 per cent beat analyst expectations, the highest on record.
Advancing issues outnumbered decliners by a 1.47-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.11-to-1 ratio on the Nasdaq.
The S&P index recorded 26 new 52-week highs and no new lows, while the Nasdaq recorded 72 new highs and 35 new lows. — Reuters
