The Nasdaq Composite rose to its biggest weekly gain of the year, boosted by signs of strength in the U.S. economy and a rise in biotechnology companies.
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In the past week, investors navigated the damage caused by Hurricane Harvey and renewed tensions between the U.S. and North Korea, while also focusing on upbeat data on personal spending as well as steady job creation and low unemployment. Some big acquisition announcements and a landmark new drug approval helped catapult major indexes higher.
On Friday, stocks edged higher following a roughly-in-line jobs report.
The pace of hiring slowed and the U.S. unemployment rate rose slightly last month, according to the Labor Department, but wages ticked up less than expected. This is good for stock prices, some analysts say, as wages are rising enough to spur more consumer spending but not at a fast enough pace to compel the Federal Reserve to raise interest rates.
"Thankfully, the improvement in the labor market is not leading to too fast wage growth," said Sameer Samana, global quantitative and technical strategist at Wells Fargo Investment Institute. "It's right now in the sweet spot where it's enough to drive consumption, but not enough to lead to inflation jumping up so the Fed feels it needs to be more aggressive. It's also not affecting profit margins yet."
In August, average hourly earnings ticked up 0.1% from the prior month, according to the Labor Department. Economists surveyed by The Wall Street Journal had expected earnings to rise 0.2%.
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The Dow Jones Industrial Average rose 39.46 points, or 0.2%, to 21987.56 on Friday, putting its weekly gain at 0.8%. The S&P 500 added 4.90 points, or 0.2%, to 2476.55 putting its weekly gain at 1.4%, its biggest since July. The Nasdaq Composite added 6.67 points, or 0.1%, to 6435.33.
The Nasdaq Composite finished the week up 2.7%, lifted by a 8% rise in the Nasdaq Biotechnology Index in the period. Biotech shares soared following the Food and Drug Administration's approval of the first gene therapy in the U.S. on Wednesday. The group earlier got a boost by Gilead Sciences, which on Monday agreed to pay about $11 billion for Kite Pharma.
In other merger news, shares of United Technologies surged on Tuesday after The Wall Street Journal reported the aircraft-equipment maker was near a deal to buy Rockwell Collins for more than $20 billion. United Technologies ended the week up 2.5%.
In Europe, the Stoxx Europe 600 rose 0.6% this week. On Friday, shares of industrial goods and construction companies were among the best performers, as data showed activity in the eurozone's manufacturing sector increased in August to a joint 74-month high.
Earlier, Asian shares mostly inched higher, with China gaining slightly after a private gauge of Chinese factory activity rose for the third straight month in August. The Shanghai Composite Index closed 0.2% at its highest level since December 2015 as coal and steel stocks advanced. Stocks in Shenzhen added 0.6%.
Japan's Nikkei Stock Average added 0.2% amid gains in energy companies, ending the week 1.2% higher. The index ended a six-week losing streak, its longest since early 2014, with its biggest weekly gain since June.
In commodities, gasoline futures jumped 13%, its biggest one-week percentage gain in more than five years, as Hurricane Harvey caused U.S. refinery and pipeline shutdowns. U.S.-traded crude oil fell 1.2% during the week to $47.29 a barrel.
Meanwhile the price of gold for September delivery jumped 2.5% to $1324.50 an ounce during the past week following the missile launch in North Korea, uncertainty about when the Fed may next raise interest rates and a weaker dollar. The rise was gold's biggest gain in more than a year.
Write to Riva Gold at firstname.lastname@example.org and Corrie Driebusch at email@example.com
(END) Dow Jones Newswires
September 01, 2017 17:13 ET (21:13 GMT)