Nasdaq Composite Posts Biggest Weekly Gain of the Year

The August jobs report showed smaller growth than expected. Cathy Barrera, ZipRecruiter’s Chief Economic Advisor, shares insight on the report and which industries are hiring.

Nikkei ends six-week losing streak

-- European stock funds post biggest outflow since February

The dollar weakened and stocks edged higher following slightly softer-than-expected wage growth in August.

Despite low unemployment and steady job creation, wages have been stuck at a modest rate for a long time, drawing caution from policy makers. Many investors look to wage growth figures, which they view as a sign of inflation, to gauge the outlook for U.S. monetary policy.

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%.

"You're not getting a lot of wage growth," said Anish Chopra, equities and fixed-income specialist at Portfolio Management Corp. "If you look at what the Fed can do, I don't think there's much more room they have to move up [rates], because there's very little inflation that's out there."

U.S. stock futures pointed to a 0.3% opening gain for the S&P 500. The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, edged down 0.3% compared with a 0.1% loss ahead of the report.

In addition to wage growth, the Labor Department's report showed the pace of hiring slowed in August. Nonfarm payrolls rose by a seasonally adjusted 156,000 in August from the prior month. The unemployment rate rose to 4.4% from 4.3%. Economists surveyed by The Wall Street Journal had expected 179,000 new jobs and a 4.3% unemployment rate.

Following the report, investors saw a roughly 37% chance of a rate rise by the end of December, according to Fed-funds futures tracked by CME Group. Ahead of the report, investors saw a roughly 42% chance of a rate rise by the end of December.

In European stocks Friday, shares of industrial goods and construction companies were among the best performers in Europe as data showed activity in the eurozone's manufacturing sector increased in August to a joint 74-month high.

Shares of Volvo AB climbed 7.2%, leading gains in the region after the auto maker said it was targeting operating margins over 10%. Shares of drug addiction treatment developer Indivior PLC fell 35% after it said a U.S. court found treatments haven't infringed its patents.

Investors pulled the most from European equity funds since February in the week through Wednesday amid concerns about this month's European Central Bank meeting and a recent climb in the euro to a 2 1/2 -year high, according to fund-tracker EPFR Global.

"The ECB is getting in a bit of a bind given the strength of the euro," said Kirk Hartman, global chief investment officer at Wells Fargo Asset Management. "As an export driven economy, you worry about the impact of a strong currency."

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%.

"I think China is a big winner here," Mr. Hartman added, noting the country's growth rate is steady just as it has stemmed the flight of capital outside the country and the yuan has stabilized.

Japan's Nikkei Stock Average added 0.2% amid gains in energy companies. The index ended a six-week losing streak, its longest since early 2014, with its biggest weekly gain since June.

Australia's S&P ASX 200 rose 0.2%, led by health-care shares, while markets in Singapore, Indonesia, Malaysia and the Philippines were closed Friday for a holiday.

In commodities, gasoline futures jumped Friday as Hurricane Harvey caused U.S. refinery and pipeline shutdowns. Brent crude oil fell 0.4% to $52.64 a barrel.

--Corrie Driebusch contributed to this article.

Write to Riva Gold at riva.gold@wsj.com

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.

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%.

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.

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 riva.gold@wsj.com and Corrie Driebusch at corrie.driebusch@wsj.com

(END) Dow Jones Newswires

September 01, 2017 17:13 ET (21:13 GMT)