MARKET SNAPSHOT: Stock Market Carves Out Records After Jobs Report

By Wallace Witkowski and Anora Mahmudova, MarketWatch Features Dow Jones Newswires

Nonfarm payrolls show 138,000 jobs added in May

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U.S. stock-market indexes pushed out intraday records Friday, as a weaker-than-expected May jobs report threatened to undermine confidence in the economy, raising speculation that the year might just have one more interest rate left in it.

The S&P 500 index hit an intraday record at 2,437.58, and was recently trading up 7 points, or 0.3% higher at just under 2,437. Of the 11 main sectors, seven were trading higher. Energy shares were leading the losses, down 1.1%, largely following lower oil prices. Financials stocks were the other area of weakness on Wall Street, with the sector trading 0.2% lower.

The Dow Jones Industrial Average rose 68 points, or 0.3% to 21,212, led higher by shares of Boeing Co.(BA) and Microsoft Corp.(MSFT) Earlier, the average touched a record intraday high of 21,221.33.

The Nasdaq Composite Index climbed 44 points, or 0.7%, to 6,291, after touching an intraday high of .6,294.16.

All three main indexes are on track to close at records, and set to end the week with modest gains of less than 1%.

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The May nonfarm payrolls data (http://www.marketwatch.com/story/us-adds-138000-jobs-in-may-unemployment-drops-to-16-year-low-of-43-2017-06-02)showed the economy added 138,000 jobs last month, coming in below Wall Street economists' forecasts.

The details of the jobs report were also weaker than expected. The number of job gains for April and March were revised lower. The unemployment rate slipped to 4.3% but the decline was largely due to shrinking labor force. Average wages rose 0.2% to $26.22 an hour, in line with expectations.

"This is undoubtedly a weak jobs report, especially with downward revisions. But it's just one data point that will not change the Fed's course, which is to raise rates at its June meeting," said Michael Antonelli, equity sales trader at Robert W. Baird & Co.

"Nonfarm payrolls month-to-month is a very jumpy number and a one-off weakness should not be seen as a beginning of a trend. For example, we've had a very poor print in May 2016, with 43,000 jobs. Since then, the S&P 500 is up about 400 points," Antonelli said.

Read:The S&P 500 has never had a down year after a start like 2017 (http://www.marketwatch.com/story/the-sp-500-has-never-had-a-down-year-after-a-start-like-2017-2017-05-31)

Despite the unexpectedly low print on the jobs report, expectations for a rate increase in June didn't fall. Fed fund futures are pricing in a 91% probability of a rate increase this month, according to the CME FedWatch tool (http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html).

While a June hike is widely expected, the weak jobs number and tepid wage growth may give the Fed pause when it comes to other rate increases this year, said Paul Nolte, portfolio manager at Kingsview Asset Management, in an interview.

"Wage growth is not fabulous, and maybe that gives the Fed room to sit on rates," Nolte said. "Markets love a near-zero rate."

Should inflation trends and weakness persist then it's entirely possible that a rate increase in June could be the last one of 2017, and with Treasury yields at unexpected lows, equities become one of the few games in town for a return, said Nolte.

The yield on the 10-year Treasury note (http://www.marketwatch.com/story/treasury-yields-decline-after-weaker-than-expected-jobs-report-2017-06-02) fell nearly 6 basis points to 2.156%, declining below its 200-day moving average for the first time since October. Meanwhile, the dollar weakened against other major currencies, with the ICE U.S. Dollar index down 0.4% at 96.77.

Other markets: Oil prices fell 0.8% to three-week lows (http://www.marketwatch.com/story/oil-prices-stay-weak-as-investors-return-to-worries-over-rising-production-2017-06-02) on Friday, partly driven by concerns that President Donald Trump's decision to withdraw (http://www.marketwatch.com/story/trump-today-president-withdraws-us-from-paris-climate-agreement-and-says-he-wants-fair-deal-2017-06-01) the U.S. from the Paris Climate Accord will lead to an increase in U.S. oil output.

Wall Street's optimism spread across the globe Friday. The Nikkei 225 index closed above the key 20,000 level, adding 1.6% as the Japanese yen eased against the dollar . European stocks were headed for a two-week high (http://www.marketwatch.com/story/european-stocks-head-for-2-week-high-with-investors-hopeful-about-key-us-jobs-data-2017-06-02), and the FTSE 100 pared back from an intraday high and closed up less than 0.1% (http://www.marketwatch.com/story/ftse-100-on-track-for-all-time-high-as-us-records-lift-trading-mood-2017-06-02).

Gold prices rose 0.7% in the wake of the jobs data (http://www.marketwatch.com/story/gold-lower-headed-for-weekly-drop-on-forecasts-for-strong-jobs-tally-2017-06-02).

Individual stocks: Shares of Broadcom Limited(AVGO) jumped by 8% after reporting earnings.

Shares of Lululemon Athletica Inc.(LULU) shot up 13% after the apparel-maker posted first-quarter results that beat expectations (http://www.marketwatch.com/story/lululemon-shares-rally-10-after-company-earnings-ivivva-restructuring-plans-2017-06-01) and announced a shake-up of its Ivivva brand, late Thursday.

Leading the slump in energy were shares of Devon Energy Corp.(DVN), Newfield Exploration Co. (NFX), Range Resources Corp. (RRC), and Transocean Ltd.(RIG) all with declines of 2% or more.

Shares of Delta Air Lines (DAL) advanced by 3% after the company reported its monthly operating performance.

Shares of RH Inc.(RH) sank 26% after the retail chain formerly known as Restoration Hardware cut its earnings outlook for the year (http://www.marketwatch.com/story/restoration-hardware-plunges-more-than-20-after-cutting-earnings-forecast-2017-06-01).

(http://www.marketwatch.com/story/restoration-hardware-plunges-more-than-20-after-cutting-earnings-forecast-2017-06-01)--Barbara Kollmeyer in Madrid contributed to this article.

Opinion: This is the most recommended stock (http://www.marketwatch.com/story/this-is-the-most-recommended-us-stock-2017-06-02)

(END) Dow Jones Newswires

June 02, 2017 13:13 ET (17:13 GMT)