U.S. stocks finished nicely higher following the mostly upbeat June nonfarm payroll report that showed job growth for the month was well above projections. Treasury yields extended a recent run and the U.S. dollar was higher, while crude oil prices gave back the previous session’s gains and gold was lower. In light equity news, Qualcomm announced that it has filed a patent infringement complaint against Dow member Apple.

The Dow Jones Industrial Average (DJIA) gained 94 points (0.4%) to 21,414, the S&P 500 Index increased 15 points (0.6%) to 2,425, and the Nasdaq Composite jumped 64 points (1.0%) higher to 6,153. In moderately-light volume, 735 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq. WTI crude oil decreased $1.29 to $44.23 per barrel and wholesale gasoline lost $0.03 to $1.50 per gallon. Elsewhere, the Bloomberg gold spot price dipped $1.96 to $1,225.08 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% higher at 96.00. Markets gained modest ground for the week, as the DJIA increased 0.3%, S&P 500 Index ticked 0.1% higher and the Nasdaq Composite rose 0.2%.

Warren Buffett’s Berkshire Hathaway Inc. (BRK/B $171) announced that its energy subsidiary executed an agreement to merge with Energy Future Holdings Corp in an all-cash transaction totaling $9.0 billion, which the company said will ultimately result in the acquisition of Oncor, the largest electricity-transmission operator in Texas. Berkshire traded modestly higher.

Qualcomm Inc. (QCOM $55) announced that it has filed a patent infringement complaint with the U.S. International Trade Commission (ITC) against Dow member Apple Inc. (AAPL $144), seeking to ban certain iPhones from being imported to the U.S.

Shares of both companies traded higher as the technology sector rebounded on the heels of the group’s recent rollover after leading the markets higher for the past twelve months to record levels.Nonfarm payrolls (chart) rose by 222,000 jobs month-over-month (m/m) in June, compared to the Bloomberg forecast of a 178,000 increase. The rise of 138,000 seen in May was revised to a gain of 152,000 jobs. The total upward revision to the job gains in May and April was 47,000. Excluding government hiring and firing, private sector payrolls increased by 187,000, versus the forecasted gain of 170,000, after increasing by 159,000 in May, revised from the 147,000 rise that was initially reported. Job growth came in healthcare, social assistance, financial activities and mining, while professional and business services and food services and drinking places remained on upward trends.

The unemployment rate ticked higher to 4.4% from 4.3%, where it was forecasted to remain, as the labor force participation rate ticked higher from 62.7% to 62.8%. Average hourly earnings rose 0.2% m/m, below projections of a 0.3% gain and versus May’s downwardly revised 0.1% increase. Compared to the last year, average hourly earnings were 2.5% higher, versus the prior month’s downwardly revised 2.4% pace and below the projected 2.6% rate. Finally, average weekly hours rose to 34.5 from May’s unrevised 34.4 rate, where it was projected to remain.

The shortened week for stocks finished with modest gains as the divergence among the major sectors continued to begin the second-half of 2017. Financials extended a rally, along with Treasury yields amid a rise in global bond rates on the recent increase in hawkish sentiment toward global central banks, bolstered by some upbeat data.

Schwab Center for Financial Research – Market Analysis Group

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