Wall Street shares marked fresh record highs on Friday after US non-farm payrolls beat consensus forecasts - by a huge margin.
The July Employment Report showed that the world’s biggest economy added 255,000 jobs, down from 292,000 in June but way ahead of a 180,000 consensus forecast.
Although the numbers will make the Fed fret over a possible rate hike, economists are insisting that sluggish pay growth means the central bank has slack and could leave rates alone until 2017.
The S&P 500 bellwether marked a fresh record high close of 2,180, up 0.8%, while the S&P Midcap 400 advanced by 1% to 1,562 and the S&P Smallcap 600 ended up 1.3% at 746. The tickers all marked intraday record highs too.
The Nasdaq Composite closed up 1.1% at 5,221. Although the closing level was off a record high close at the start of the week, the tech-heavy index still managed an intraday record high on Friday of 5,227.
US stocks stormed higher at midsession on Friday, with the S&P 500 and mid-cap S&P 400 both chalking a fresh record high after non-farm payrolls in July hugely outstripped expectations.
The key economic barometer posted 255,000 new jobs created in July versus market forecasts of 180,000.
Markets didn’t need telling twice. The S&P 500 hit 2,182.33, a fresh record high. Last month it marked a succession of record high intraday and closing levels that took it as far as 2,177.99.
The S&P Midcap 400 rose by 1% to 1,562. Earlier it marked 1,563 – a record high.
The top mid-cap gainer was Esterline Technologies Corp (NYSE:ESL), up 10.9% to $69.07. The aerospace and defense equipment maker release third quarter earnings late on Thursday.
The S&P Smallcap 600 advanced by 1.4% to 747. Earlier it marked 747.94 – a fresh record high for the ticker.
The top small-cap gainer in the index was SPX Corp (NYSE:SPXC) up 16.4% to $17.69. The company announced second-quarter results late on Thursday.
The pace of US job creation eclipsed analysts’ forecasts in July, reinforcing the idea that the weak jobs growth in May was a blip. It also means that a rate hike as soon as September but more likely in December after the US Presidential elections is back on the cards.
The gains in the market were not, however, solely thanks to a nice easily traded number. A measure of expected volatility for US stocks tumbled on Friday to its lowest level in a year after upbeat data on the American labour market sent the S&P 500 to a new record high.
The Vix index dropped by as much as 10% to 11.18, the lowest level on an intra-day basis since August 5, 2015, Bloomberg data show.
The so-called Wall Street “fear gauge” climbed to 26.7 on June 27 in the wake of the Brexit vote that shook global financial markets. It went higher still in mid-February of 30.9 as concerns swirled that falling oil prices would impact the broader economy negatively.
US shares started on the front foot as the non-farm payroll numbers came in a lot better than expected.
The benchmark Dow Jones added 0.75% to stand at 18,490, while the S&P500 added 0.63% to 2,177.
The techheavy Nadaq added 1.01% to stand at 5,218.
On Nasdaq a noteable gainer was Lantheus Holdings Inc (NASDAQ: LNTH) which gained over 38% to US$ 5.39 after yesterday reporting a second-quarter net income of $7.4 million, after reporting a loss in the same period a year earlier.
Bristol Myers Squib (NYSE:BMY) shed over 17% to 62.51p as one of its key immunotherapy drugs failed a phase III trial as a treatment for lung cancer.
Opdivo is already approved in a number areas but did not meet its primary endpoint as a treatment for non-small cell lung cancer.
The US created 255,000 jobs last month , roundly trumping estimates of 175,000. 180,000 expected.
It brings centre stage agin the debate about whether the Fed will raise rates this September, and consensus seems split on the matter, with the strong economic US outlook tempered by external and global factors, not least the pressure European markets are undergoing.
US markets are set to open firmer ahead of the release of US jobs data for July.
Spread betting quotes point to the S&P 500 opening around four points up from last night's close of 2,164, though that could all change when the jobs numbers are released.
The market is expecting around 182,000 jobs to have been added last month, while the unemployment rate is tipped to fall to 4.8% from June's level of 4.9%.
When open outcry trading starts, eyes are likely to be on social media gaming firm Zynga Inc (NASDAQ:Zynga) after it issued a soft outlook for revenue for the third quarter in an announcement made after the close of trading last night.
Shares in the Farmville game market tumbled 6.7% to US$2.77 in pre-market trading.
It was much the same story for Hortonworks Inc (NASDAQ:HDP), only more so.
The software firm also lowered its revenue forecast, sending the shares tumbling by almost a third in screen-based trading this morning.