Stock Market Today: Wall Street Sets New Records After Optimistic Jobs Report

U.S. stocks experienced a notable rise on Friday, reaching new record highs following the release of data indicating that the job market remains strong enough to support the economy. Importantly, this data also suggested there are no immediate concerns regarding inflation, which contributed to this upward movement in the market.

The S&P 500 index increased by 0.2%, just surpassing the all-time high achieved earlier in the week, closing out a successful third consecutive week of gains. This performance contributes to what is shaping up to be one of the market's best years since the collapse of the dot-com bubble in 2000. Meanwhile, the Dow Jones Industrial Average saw a slight decline of 123.19 points, or 0.3%, and the Nasdaq composite index grew by 0.8%, achieving a new record.

The trading environment remained relatively calm as the most recent jobs report came in with mixed results, further reinforcing traders’ belief that the Federal Reserve is likely to reduce interest rates in its next meeting scheduled in two weeks. The report highlighted that U.S. employers had created more jobs than anticipated last month, but it also noted a surprising rise in the unemployment rate, which increased from 4.1% to 4.2%.

According to Lindsay Rosner, the head of multi-sector investing at Goldman Sachs Asset Management, "This print doesn’t kill the holiday spirit, and the Fed remains on track to deliver a cut in December." Over the past few months, the Fed has been lowering interest rates from a two-decade peak to provide additional support to a cooling job market, especially after successfully bringing inflation near its 2% target. While lower interest rates can help stimulate the economy, they also have the potential to fuel inflation.

The current expectations for multiple rate cuts from the Fed have significantly driven the S&P 500 index, which has reached an all-time high 57 times this year. Furthermore, the Federal Reserve's actions mirror a global trend, as 62 central banks around the world have lowered rates in recent months—the highest number since 2020, as highlighted by Michael Hartnett and other strategists at Bank of America.

However, within the jobs report, analysts pointed out some cautionary signs that may warrant close attention from Fed officials. Scott Wren, a senior market strategist at Wells Fargo Investment Institute, noted that wage growth was slightly stronger than economists forecasted. Although this increase is beneficial for workers, it could exert further upward pressure on inflation.

Wren stated, "This report tells the Fed that they still need to be careful as sticky housing/shelter/wage data shows that it won’t be easy to engineer meaningfully lower inflation from here in the nearer term." As traders anticipate an 85% chance that the Fed will decrease its main interest rate in the coming weeks, they remain less certain regarding the number of additional cuts likely in the upcoming year, according to data from the CME Group.

The key concern is whether the job market can continue to bolster consumer spending, which is crucial in preventing the U.S. economy from slipping into a recession—a scenario that seemed increasingly likely earlier this year after rapid interest rate hikes by the Fed aimed at curbing inflation.

A number of retailers provided positive updates as they reported better-than-expected quarterly earnings. For instance, Ulta Beauty saw its stock rise by 9% after exceeding profit and revenue predictions, attributing its success to new store openings and raising its sales forecast for the year. Similarly, Lululemon experienced a significant increase of 15.9% in stock value following a strong profit report, which highlighted robust sales, particularly outside the United States.

Overall, retailers have been sending mixed signals about the resilience of U.S. consumers, particularly against the backdrop of a slowing job market and ongoing high prices. For example, Target shared a pessimistic forecast for the upcoming holiday shopping season, while Walmart presented a more optimistic outlook.

On a positive note, consumer sentiment appears to be improving more than many economists predicted. A preliminary reading from a survey conducted by the University of Michigan reached its highest point in seven months, revealing a surge in consumer spending as individuals rushed to buy certain items in anticipation of possible price increases linked to tariffs threatened by President-elect Donald Trump.

In the technology sector, Hewlett Packard Enterprise saw a notable uplift of 10.6% after reporting stronger-than-expected profits and revenues. Tech stocks, in general, performed well this week, especially as companies like Salesforce highlighted the substantial advantages they are gaining from the artificial intelligence boom.

In closing, the S&P 500 rose by 15.16 points to close at 6,090.27. The Dow decreased by 123.19 points, resulting in a total of 44,642.52, while the Nasdaq composite soared by 159.05 points to end at 19,859.77.

In the bond market, the yield on the 10-year Treasury note fell to 4.15% from 4.18% at the end of Thursday.

Globally, stock markets exhibited varied performances. France’s CAC 40 rose by 1.3% after President Emmanuel Macron announced plans to remain in office until the end of his term and intends to appoint a new Prime Minister soon. Earlier this week, a no-confidence motion led the Prime Minister and his cabinet to resign amid budget disputes.

In Asia, stock indexes presented mixed results, with Hong Kong and Shanghai experiencing rallies of 1.6% and 1%, respectively, ahead of an upcoming annual economic policy meeting. Conversely, South Korea’s Kospi dropped by 0.6% as the ruling party leader expressed support for suspending presidential powers following tumultuous political events surrounding President Yoon Suk Yeol.

Bitcoin was trading near $101,500 after briefly exceeding $103,000 to reach a record high the previous day.

Stocks, Market, Jobs, Retail, Economy