Nonfarm payrolls show 138,000 jobs added in May
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U.S. stock-market indexes closed at records Friday, led by gains for technology shares as investors looked past a weaker-than-expected May jobs report.
The S&P 500 index closed up 9.01 points, or 0.4%, at a record 2,349.07, after touching an intraday record at 2,440.23. Tech, with a 1% rise, was the top performing sector. Energy shares finished down 1.2%, largely following oil prices. Financials stocks were another area of weakness on Wall Street, with the sector trading 0.4% lower.
The Dow Jones Industrial Average rose 62.11 points, or 0.3%, to finish at a record 21,206.29, led higher by shares of Boeing Co.(BA) and Microsoft Corp.(MSFT) Earlier, the average touched a record intraday high of 21,225.04.
The Nasdaq Composite Index climbed 58.97 points, or 0.9%, to close at a record 6,305.80, after touching an intraday high of 6,308.76.
Along with all three main indexes closing at records, the Dow industrials finished the week up 0.6%, the S&P 500 advanced 1%, and the Nasdaq gained 1.5%.
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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 2.154%, 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 last down less than 0.1% at 96.68.
Other markets: Oil prices fell 1.5% to settle at $47.66 a barrel for a three-week low (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.
The Nikkei 225 index closed above the key 20,000 level, adding 1.6% as the Japanese yen eased against the dollar . European stocks finished higher (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 to close 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 0.8% (http://www.marketwatch.com/story/gold-lower-headed-for-weekly-drop-on-forecasts-for-strong-jobs-tally-2017-06-02) to settle at $1,280.20 an ounce.
Individual stocks: Shares of Broadcom Limited(AVGO) finished up 8.5% after reporting earnings.
Shares of Lululemon Athletica Inc.(LULU) shot up nearly 12% 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), all of which finished down 3% or more, while Transocean Ltd.(RIG) shares declined 2.2%.
Shares of Cooper Cos.(COO) rallied 8.4% after Raymond James raised its price target of medical device company's stock.
Shares of Delta Air Lines (DAL) advanced 2.7% after the company reported its monthly operating performance.
Shares of RH Inc.(RH) sank nearly 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)Opinion: This is the most recommended stock (http://www.marketwatch.com/story/this-is-the-most-recommended-us-stock-2017-06-02)
--Barbara Kollmeyer in Madrid contributed to this article.
(END) Dow Jones Newswires
June 02, 2017 16:29 ET (20:29 GMT)