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Financial Markets, 2nd Ld-Writethru 07/03 16:46
NEW YORK (AP) -- U.S. stocks climbed further into record heights on Thursday
after a report showed the U.S. job market looks stronger than Wall Street
expected.
The S&P 500 rose 0.8% and set an all-time high for the fourth time in five
days. The Dow Jones Industrial Average added 344 points, or 0.8%, and the
Nasdaq composite gained 1%.
The market's gains were widespread, and companies whose profits can get the
biggest boosts when workers are feeling confident helped lead the way. Expedia
climbed 3.2%, and Norwegian Cruise Line steamed 2.9% higher.
Bank stocks were also strong, with Citigroup up 2.3%, and JPMorgan Chase up
1.9%.
The reaction was bigger in the bond market following the report from the
U.S. government, which said employers added 147,000 more jobs to their payrolls
last month than they cut. The unexpected acceleration in hiring signals the
U.S. job market is holding up despite worries about how President Donald
Trump's tariffs may hurt the economy and inflation.
"There is nothing to complain about here," according to Carl Weinberg, chief
economist at High Frequency Economics. "You cannot find any evidence of a
nascent recession in these figures."
A separate report, meanwhile, said fewer U.S. workers applied for
unemployment benefits last week, an indication of easing layoffs.
Yields jumped in the bond market as investors bet the better-than-expected
data could keep the Federal Reserve on hold when it comes to interest rates,
instead of cutting them like Trump has loudly been calling for.
Traders in the futures market now see less than a 5% chance that the Fed
could cut its main interest rate at its next meeting later this month. That's
down sharply from the nearly 24% chance they saw just a day earlier, according
to data from CME Group.
The Fed's chair, Jerome Powell, has been insisting that he wants to wait and
see how Trump's tariffs affect the economy and inflation before making its next
move. While lower rates give a boost to the economy by making it easier to
borrow money, they can also give inflation more fuel. And that could be
dangerous if Trump's tariffs are about to send inflation higher.
Many of Trump's stiff proposed taxes on imports are currently on pause, but
they're scheduled to kick in next week unless Trump reaches deals with other
countries to lower them.
Many U.S. companies in the services industries are still saying they're
concerned about the impacts of tariffs, even if they returned to growth last
month following May's contraction, according to the most recent survey by the
Institute for Supply Management.
"Increased cost from tariffs and the potential for tariffs is impacting cost
increases," one company in the agriculture, forestry, fishing and hunting
industry said in the survey.
The yield on the 10-year Treasury rose to 4.34% from 4.30% late Wednesday.
The two-year Treasury yield, which moves more closely with expectations for the
Fed, jumped even more. It climbed to 3.88% from 3.78%.
On Wall Street, Datadog rallied 14.9% after learning that its stock will
join the widely followed S&P 500 index before trading begins on Wednesday. Many
managers of funds either directly mimic or at least compare themselves against
the S&P 500, which drives investment into any stock that joins the index.
Datadog will replace Juniper Networks, which combined with Hewlett Packard
Enterprise in a merger.
On the losing side of Wall Street were companies that can feel pain from
interest rates staying high.
Homebuilders would like rates to fall in order to make mortgages cheaper to
get, for example, and Lennar sank 4.1%, while D.R. Horton dropped 2.7%.
All told, the S&P 500 rose 51.93 points to 6,279.35. The Dow Jones
Industrial Average added 344.11 to 44,828.53, and the Nasdaq composite climbed
207.97 to 20,601.10.
In stock markets abroad, indexes rose across much of Europe and Asia. South
Korea's Kospi climbed 1.3%, and Hong Kong's Hang Seng fell 0.6% for two of the
bigger moves.
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AP Writers Teresa Cerojano and Matt Ott contributed.
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