Stocks Post Gains Heading Into Holiday Weekend…..

U.S. equities finished higher heading into the long holiday weekend, posting gains for a second-straight time on a weekly basis. Information Technology stocks led the way amid a decline in Treasury yields despite a stronger-than-expected June nonfarm payroll report that appeared to keep Fed taper timing concerns at bay. The U.S. dollar fell and gold gained modest ground, while crude oil prices ended nearly unchanged in choppy trading as an agreement on oil production among OPEC and its allies, known as OPEC+, remained elusive with the United Arab Emirates continuing to object to a deal on the table. News on the equity front was in short supply, but Dow member Johnson & Johnson announced positive data regarding its efficacy of its single-shot COVID-19 vaccine against the Delta variant, and Tesla posted Q2 deliveries that were mostly in line with forecasts. In other economic news, the trade deficit widened by a slightly smaller amount than estimated, and factory orders came in slightly stronger than expected. Markets in Europe and Asia finished out the week mixed.

The Dow Jones Industrial Average rose 153 points (0.4%) to 34,786, the S&P 500 Index increased 32 points (0.8%) to 4,352, while the Nasdaq Composite gained 117 points (0.8%) to 14,639. In light-to-moderate volume, 694 million shares were traded on the NYSE and 3.7 billion shares changed hands on the Nasdaq. WTI crude oil ticked $0.07 lower to $75.16 per barrel. Elsewhere, the Bloomberg gold spot price increased $10.89 to $1,787.73 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—fell 0.4% to 92.25. Markets were higher for a second-straight week, as the DJIA rose 1.0%, the S&P 500 advanced 1.7%, and the Nasdaq Composite moved 1.9% to the upside.

June nonfarm payroll report tops forecasts, trade deficit widens slightly less than anticipated…..

Nonfarm payrolls rose by 850,000 jobs month-over-month (m/m) in June, compared to the Bloomberg consensus estimate of a 720,000 rise, and following May’s upwardly-adjusted increase of 583,000. Excluding government hiring and firing, private sector payrolls increased by 662,000, versus the forecasted rise of 615,000 after rising by an upwardly-revised 516,000 in May. The labor force participation rate remained at May’s 61.6% rate, compared to the forecasted 61.7% rate. The Department of Labor said notable job gains occurred in leisure and hospitality, public and private education, professional and business services, retail trade, and other services.

The unemployment rate rose to 5.9% from May’s 5.8% rate, compared to expectations of a decrease to 5.6%. The underemployment rate—including total unemployed and those employed part time for economic reasons, along with people who are marginally attached to the labor force—declined to 9.8% from the prior month’s 10.2% rate. The number of permanent job losers was nearly unchanged at 3.2 million, but is 1.9 million higher than in February 2020. The number of long-term unemployed—those jobless for 27 weeks or more—increased by 233,000 to 4.0 million, a measure that is 2.9 million higher than in February 2020.

Average hourly earnings gained 0.3% m/m, matching projections, and compared to May’s downwardly-adjusted 0.4% increase. Y/Y, wages were 3.6% higher, in line with estimates, and above May’s downwardly-adjusted 1.9% rise. Finally, average weekly hours dipped to 34.7 from May’s downwardly-revised 34.8 rate, and versus estimates of a rise to 34.9 hours.

The trade balance showed that the May deficit widened by a slightly smaller amount than anticipated, increasing to $71.2 billion, from April’s upwardly-revised deficit of $69.1 billion, and compared to forecasts of $71.3 billion. Exports increased 0.6% m/m, and imports grew 1.3%.

Factory orders rose 1.7% m/m in May, versus estimates of a 1.6% gain, and compared to April’s favorably-revised 0.1% decrease. Durable goods orders—preliminarily reported last week—were unrevised at a 2.3% increase for May, and excluding transportation, orders were unadjusted at a 0.3% increase. Finally, nondefense capital goods orders excluding aircraft—considered a proxy for capital spending—were revised higher from a 0.1% dip to a 0.1% gain.

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