Stocks Remain Firmly Positive, S&P 500 Reaches Record High - U.S. Commentary

(RTTNews) - After ending the previous session roughly flat, stocks have shown a strong move to the upside during trading on Friday. With the gains on the day, the S&P 500 has set a new record intraday high, while the Nasdaq has reached its best levels in a year.

Currently, the major averages are hovering near their best levels of the day. The Dow is up 155.05 points or 0.8 percent at 18,507.10, the Nasdaq is up 55.78 points or 1.1 percent at 5,22.03 and the S&P 500 is up 16.53 points or 0.8 percent at 2,180.78.

The strength on Wall Street comes following the release of a report from the Labor Department showing much stronger than expected job growth for the second straight month.

The Labor Department said non-farm payroll employment surged up by 255,000 jobs in July after jumping by an upwardly revised 292,000 jobs in June. Employment had been expected to increase by about 185,000 jobs.

The much stronger than expected job growth seen over the past two months came after employment edged up by just 24,000 jobs in May.

Even with the stronger than expected job growth, the unemployment rate held at 4.9 percent in July. The unemployment rate had been expected to edge down to 4.8 percent.

The unemployment rate held steady as the household survey measure of employment soared by 420,000 jobs, but the number of people in the labor force also shot up by 407,000.

The report also said average hourly employee earnings climbed by $0.08 or 0.3 percent to $25.69 in July, although the annual rate of growth was unchanged at 2.6 percent.

While the data points to strength in the labor market, analysts said the Federal Reserve remains unlikely to raise interest rates next month due in part to muted GDP growth.

"With the RBA in Australia and the Bank of England providing more monetary stimulus and Japan boosting its fiscal stimulus, we think a majority of Fed officials will be nervous about raising rates given the significant boost it could give the dollar," said ING economist James Knightley.

He added, "Instead, we think they will continue to tread cautiously with one rate hike in 1Q17 and a further one in the second half of next year."

A separate report from the Commerce Department showed that the U.S. trade deficit widened by more than expected in the month of June.

Sector News

With the upbeat jobs data generating optimism about the outlook for the economy, financial stocks continue to see considerable strength in mid-day trading.

Reflecting the strength in the financial sector, the NYSE Arca Broker/Dealer Index and the Dow Jones Banks Index are up by 2.9 percent and 2.5 percent, respectively.

Significant strength has also emerged among electronic storage stocks, as reflected by the 1.9 percent gain being posted by the NYSE Arca Disk Drive Index. Imation (IMN), Micron (MU), and Datalink (DATA) are posting notable gains.

Transportation, networking, and steel stocks are also seeing notable strength, moving higher along with most of the other major sectors.

On the other hand, gold stocks are bucking the uptrend, dragging the NYSE Arca Gold Bugs Index down by 3 percent. The weakness in the sector comes as gold for December delivery is tumbling $21.90 to $1,345.50 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. Hong Kong's Hang Seng Index surged up by 1.4 percent, while Japan's Nikkei 225 Index closed just below the unchanged line and China's Shanghai Composite Index edged down by 0.2 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index advanced by 0.8 percent, the German DAX Index and the French CAC 40 Index jumped by 1.4 percent and 1.5 percent, respectively.

In the bond market, treasuries have moved sharply lower on the heels of the upbeat jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.3 basis points at 1.566 percent.