U.S. equities finished out the final session of a shortened week mixed, but notched a second solid weekly gain, that has come on the heels of increased optimism of progress on the U.S.-China trade front, and after Federal Reserve Chairman Jerome Powell’s speech in Switzerland offered mostly positive reviews of where the U.S. economy stands. Meanwhile, investors also digested a mixed August nonfarm payroll report that showed job gains were smaller than forecasts, but wage growth was solid. Treasury yields were lower after yesterday’s jump and the U.S. dollar was little changed, while crude oil prices were modestly higher and gold tacked onto yesterday’s plunge. In equity news, Lululemon gained solid ground on its earnings report and stronger-than-expected guidance, Costco Wholesale offered upbeat same-store sales and DocuSign rallied on its outlook.
The Dow Jones Industrial Average (DJIA) rose 69 points (0.3%) to 26,797, the S&P 500 Index added 3 points (0.1%) to 2,979 and the Nasdaq Composite declined 14 points (0.2%) to 8,103. In moderately-light volume, 735 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq. WTI crude oil moved $0.22 higher to $56.22 per barrel and wholesale gasoline was up $0.02 at $1.57 per gallon. Elsewhere, the Bloomberg gold spot price declined $13.58 to $1,505.47 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 98.41. Markets were higher for the week, as the DJIA increased 1.5%, the S&P 500 Index gained 1.8% and the Nasdaq Composite advanced 1.8%.
Nonfarm payrolls grew by 130,000 jobs month-over-month (m/m) in August, compared to the Bloomberg forecast of a 160,000 increase. The rise of 164,000 seen in July was revised to a gain of 159,000 jobs. Excluding government hiring and firing, private sector payrolls increased by 96,000, versus the forecasted gain of 150,000, after rising by 131,000 in July, revised from the 148,000 increase that was initially reported. The Labor Department said it saw notable jobs gains in health care and financial activities, while the mining sector lost jobs.
The unemployment rate remained at July’s 3.7% rate, in line with forecasts, while average hourly earnings were up 0.4% m/m, above projections to match July’s unrevised 0.3% gain. Y/Y, wage gains were 3.2% higher, versus estimates of a 3.0% increase, and compared to July’s upwardly-adjusted 3.3% gain. Finally, average weekly hours ticked higher to 34.4, matching estimates, from July’s unrevised 34.3 rate. The labor force participation rate rose to 63.2% from 63.0% in July.
Treasuries were higher, as the yields on the 2-year and 10-year notes were down 2 basis points (bps) at 1.52% and 1.55%, respectively, while the 30-year bond rate fell 4 bps to 2.02%.
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