U.S. Stocks Boosted by Financial Shares

By Georgi Kantchev and Corrie Driebusch Features Dow Jones Newswires

U.S. stocks rose Friday after Labor Department data showed U.S. hiring picked up more than expected in June but wage gains stalled.

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The report is a key data point for the Federal Reserve and will help determine its plans for raising short-term interest rates further and reducing its asset portfolio. While jobs growth jumped from the prior month, some analysts homed in on how average hourly earnings growth for private-sector workers was little changed from prior months.

"This report speaks to a central Fed argument," said Kristina Hooper, global market strategist at Invesco, referring to wage growth in June, which she called underwhelming. "That is, is inflation transitory? Should we be worried that lower inflation has appeared over the last few months?"

U.S. stocks climbed in early trading. The Dow Jones Industrial Average added 45 points, or 0.2%, to 21365. The S&P 500 added 0.3% and the Nasdaq Composite added 0.4%.

The monthly jobs report is less critical for the stock market now compared with several years ago as the Fed has raised rates multiple times. However, stock investors say they still watch the report closely because even as central banks pull back on their accommodative policies, rates around the world remain low and the hunt for income is still a very real issue for investors.

Nonfarm payrolls rose by a seasonally adjusted 222,000 from the prior month and the unemployment rate ticked up to 4.4% from 4.3%, the Labor Department said Friday. Economists surveyed by The Wall Street Journal had expected 174,000 new jobs and the unemployment rate to be 4.3%.

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The yield on the 10-year Treasury note initially fell after the report, though in recent trading was little changed from ahead of the data at about 2.389%, up from 2.369% on Thursday.

The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, pared some gains following the jobs report, recently up 0.1% after earlier rising 0.2% in early trading Friday.

In Europe, the Stoxx Europe 600 edged down 0.3%, dragged down by energy shares as oil prices dropped. That followed losses in bourses across Asia.

Hawkish signals from policy makers in Europe and the U.S. have roiled markets in recent days as investors gauge how fast central banks will be moving away from their ultra-accommodative monetary policies put in place after the financial crisis. Minutes from the European Central Bank's last meeting released Thursday showed officials are considering dropping a pledge to accelerate bond purchases.

"People are taking note of what signals central banks are sending," said Lefteris Farmakis, macro strategist at UBS. "If central banks rush the tightening, markets will suffer a lot."

In Asian stock markets, Japan's Nikkei Stock Average fell 0.3%, while Hong Kong's Hang Seng Index was down 0.5%.

In commodities, U.S.-traded crude oil prices fell 2% to $44.61 a barrel, extending overnight declines after data on Thursday showed that U.S. oil production last week rebounded strongly. Gold was down 0.6% to $1216.30 a troy ounce.

Write to Georgi Kantchev at georgi.kantchev@wsj.com and Corrie Driebusch at corrie.driebusch@wsj.com

U.S. stocks were on track to end the week higher, lifted by shares of financial companies.

Bank stocks have been on a tear since the firms passed the Federal Reserve's stress tests and some quickly announced higher dividends in late June. Rising government bond yields helped lift banks further during this past week, as rising interest rates can boost bank profits.

The gains offset steep losses by energy companies, which were weighed down by a drop in the price of oil.

The S&P 500 was on track to end the week up 0.1%, with the financials sector on pace to post a 1.5% gain. The Dow Jones Industrial Average and Nasdaq Composite were set to gain 0.3% for the week.

On Friday, the Dow industrials had added 99 points, or 0.5%, to 21419. The Nasdaq Composite added 1.2% as the recently volatile tech sector swung higher, and the S&P 500 added 0.7%.

Financials climbed Friday after Labor Department data showed U.S. hiring picked up more than expected in June even as wage gains stalled.

The jobs report is a key data point for the Federal Reserve that will help the central bank determine its plans for raising short-term interest rates further and reducing its asset portfolio. While jobs growth jumped from the prior month, some analysts homed in on how average hourly earnings growth for private-sector workers was little changed from prior months.

"This report speaks to a central Fed argument," said Kristina Hooper, global market strategist at Invesco, referring to wage growth in June, which she called underwhelming. "That is, is inflation transitory? Should we be worried that lower inflation has appeared over the last few months?"

Still, Ms. Hooper said such a big increase in hiring in the month suggests the jobs recovery following the financial crisis has more room to run.

The monthly jobs report is less critical for the stock market now compared with several years ago, as the Fed has raised short-term rates multiple times and is likely to raise them again in 2017. However, stock investors say the report still matters, as it provides a window into the labor market and the pace of economic growth, both of which can affect stock prices.

Nonfarm payrolls rose by a seasonally adjusted 222,000 from the prior month and the unemployment rate ticked up to 4.4% from 4.3%, the Labor Department said Friday. Economists surveyed by The Wall Street Journal had expected 174,000 new jobs and the unemployment rate to be 4.3%.

The yield on the 10-year Treasury note bounced around slightly in the wake of the jobs report, and was recently at 2.393%, according to Tradeweb, up from 2.369% on Thursday. The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was recently up 0.2%.

Hawkish signals from policy makers in Europe and the U.S. have roiled markets in recent days as investors gauge how fast central banks will be moving away from their ultra-accommodative monetary policies put in place after the financial crisis. Minutes from the European Central Bank's last meeting released Thursday showed officials are considering dropping a pledge to accelerate bond purchases.

"People are taking note of what signals central banks are sending," said Lefteris Farmakis, macro strategist at UBS. "If central banks rush the tightening, markets will suffer a lot."

In commodities, U.S.-traded crude oil prices fell 2.8% to $44.26 a barrel, after data on Thursday showed that U.S. oil production rebounded last week.

Falling oil prices weighed on energy shares in Europe on Friday, and the Stoxx Europe 600 edged down less than 0.1%. The index was up 0.2% for the week, its largest gain in about a month.

Japan's Nikkei Stock Average fell 0.3%, while Hong Kong's Hang Seng Index shed 0.5% Friday. Both indexes posted weekly declines.

Write to Corrie Driebusch at corrie.driebusch@wsj.com and Georgi Kantchev at georgi.kantchev@wsj.com

(END) Dow Jones Newswires

July 07, 2017 15:03 ET (19:03 GMT)