Despite an inconclusive jobs report that contributed to choppy trading early in the session, stocks finished Friday with modest gains. The advance allowed the major U.S. equity averages to break a four-session losing streak, which was fueled by the Federal Reserve’s refusal earlier this week to make a definitive pivot from its ultra-hawkish stance.
Looking at the day’s closing prices, the Dow Jones concluded trading at 32,403.22, an advance of 401.97 points on the session. The S&P 500 climbed 50.66 points to 3,770.55, while the Nasdaq advanced 132.31 points to 10,475.25.
All 11 S&P sectors posted gains. This was led by a 3.4% advance in Materials. Communication Services and Info Tech were also strong, bouncing back from recent weakness.
The higher finish followed four consecutive days of declines. The last two occurred after the Fed raised rates another 75 basis points. Meanwhile, the central bank only marginally hedged an otherwise consistently hawkish outlook.
“If you left for work early in the morning and came back late at night you would conclude that the market had just ticked up some to end the week,” Cestrian Capital Research’s Alex King said to Seeking Alpha. “If, however, you were sat at a brokerage screen all day you would conclude, ‘yet another crazy day in the neighborhood.'”
King noted that a reassuring tweet from well-connected Fed reporter helped the market brush off a jobs report that many might have otherwise considered too indictive of a strong labor market for Wall Street’s comfort. Meanwhile, King also argued that some earnings-related slides created a source of cash for bargain hunting elsewhere on Friday, paired with some institutional interest in the risk-on crypto space.
“High beta software names were hit by a couple of poor earnings reports yesterday and the sector then provided a source of funds for investors chasing the major indices up later in the day towards the close,” King argued. “Crypto … was on fire all day – further to our view that Bitcoin and Ether are under institutional accumulation.”
The biggest headlines of the day came from the government’s monthly employment report. The data pointed to 261K new jobs added for October, above the 210K that economists were expecting. Meanwhile, the figure showed hourly wages increasing.
These numbers were offset slightly by a bigger-than-expected increase in the unemployment rate, which rose to 3.7%. This was up from 3.5% in the previous month and above the 3.6% that economists were projecting.
Going into the report, investors were generally looking for signs of slack in the jobs report, as a softening labor market would remove a key inflation pressure and perhaps point to an earlier pivot from the Fed.
The latest data gave a mixed reading on this front. The higher unemployment rate could suggest a loosening of labor conditions. However, the sturdy job growth and stubborn wages indicated ongoing resilience in this key part of the economy.
“The jobs report was strong, but it is the smallest amount of job gains in many years, so that’s good. The unemployment rate ticked up. It’s not enough for the Fed to say ‘okay we’re going to pause’ but it is enough that things are moving in the right direction,” Thomas Hayes, chairman at investment management firm Great Hill Capital, told Seeking Alpha.
Turning to the bond market, rates showed a mixed performance. The 10-year Treasury yield (US10Y) rose 5 basis points to 4.18%. The 2-year yield (US2Y) slipped 3 basis point to 4.67%. The dollar index (DXY) dropped b 1.9%.
Among individual stocks, DraftKings and Twilio both crashed following their respective quarterly reports. Meanwhile, Starbucks rallied after its own financial figures showed better-than-expected comparable sales growth.