Jobs data surprises to the downside
Data showed the US economy unexpectedly shed jobs last month, dampening expectations the Federal Reserve would raise interest rates at its September meeting.
The Labor Department on Friday said nonfarm payrolls decreased by 23,000 jobs last month, well below the estimate of economists polled by Reuters that called for an increase of 80,000 jobs.
Previously reported job gains for the prior two months were also revised sharply lower. The unemployment rate fell to 4.1% last month from 4.2% in June due to workers leaving the labour force.
Rate-hike bets fade
Market expectations for a rate hike from the Fed at its next meeting dropped to about 44%, according to CME FedWatch, down from 55% in the prior session and 67% a week ago.
Signs of progress for a potential peace deal in the Iran war have helped cool oil prices. In turn, that has eased inflation worries that could prompt a Fed rate hike and pushed Treasury yields lower.
A strong earnings season has also tempered concerns about the massive spending by AI-related companies, sending each of the three major indexes to their biggest weekly percentage gains since mid-April.
"You probably have to lower rates to kind of stimulate job growth, but if you lower rates, you're going to also stimulate inflation. So you're kind of in a pickle at this point, and yet the market's just taken off because earnings have been stellar," said Tom Siomades, chief market economist at AE Wealth Management in Topeka, Kansas.
"The market should be reacting to weak job numbers and higher inflation and the possibility of a slow-growth economy that may need to have rates raised rather than cut, and yet it's not. We're setting records, so go figure."
Earnings keep beating expectations
With earnings season entering the final stretch, of the 436 companies in the S&P 500 that have already reported results through Friday morning, 85.1% have topped analyst expectations, according to LSEG data - well above the 68% average since 1994.
Under new Fed Chair Kevin Warsh, the US central bank has offered investors little forward guidance on monetary policy, leading market participants to focus on economic data and commentary from policymakers.
The Dow Jones Industrial Average rose 151.83 points, or 0.28%, to 54,036.93, the S&P 500 gained 47.68 points, or 0.62%, to 7,757.64 and the Nasdaq Composite gained 342.26 points, or 1.30%, to 26,690.62.
For the week, the S&P 500 gained 3.58%, the Nasdaq rose 5.19%, and the Dow climbed 2.96%.
The big movers
Elon Musk's SpaceX surged 15.8% a day after the expiry of the first of several share lockup restrictions following its record public offering in June.
Collaboration software maker Atlassian shot up 35.3% for its largest-ever daily percentage gain. Chip company Microchip Tech jumped 13.9%, its best daily performance in more than 15 months, after both forecast quarterly revenue above estimates.
Among other movers, vacation rental company Airbnb rose 17.4% as the best performer on the S&P 500 after beating second-quarter revenue estimates.
