Stocks shuffled between gains and losses on Friday as investors reacted to a stronger-than-expected jobs report that will likely keep the Federal Reserve on track for its aggressive rate hikes.
The S&P 500 and the tech-heavy Nasdaq Composite dipped 0.3% and 0.4%, respectively. The Dow Jones Industrial Average shed 35 points, or about 0.1%, after being up more than 100 points earlier in the session.
Nonfarm payrolls increased 372,000 in the month of June, better than the 250,000 Dow Jones estimate and continuing what has been a strong year for job growth, according to data Friday from the Bureau of Labor Statistics.
“The overall picture is pretty strong job growth, and I’d say quite good earnings growth. That just makes the case for 75 basis points this month almost air tight,” said Michael Schumacher, head of macro strategy at Wells Fargo.
Defensive-oriented health care consumer staples stocks were among the outperformers. Centene Corp. and Moderna each gained more than 3%, while UnitedHealth Group rose 2.4%. Pepsico added more than 1%, while Costco climbed nearly 2%.
Treasury yields jumped sharply after the jobs data was released, which may have limited gains for stocks. Tech and other high-growth sectors are sensitive to rising rates, as that can devalue future earnings. Shares of PayPal and Match.com fell more than 1%.
Commodities stocks also underperformed, continuing recent volatility in those sectors. Mining stock Freeport-McMoRan dipped 2.4%. Railroad stocks also struggled, with Union Pacific and Norfolk Southern falling about 2%.
Though the jobs report was a positive sign for the state of the U.S., many investors believe that will allow the Federal Reserve to aggressively fight inflation with rate hikes in the coming months.
“This report is good news is bad news for the market today…you couldn’t ask for anything better from this jobs report in terms of broad gains, low unemployment, the number was above expectations,” said Michael Arone of State Street Global Advisors. “Wages were growing but at a slower rate. …That was a good thing, and yet the markets kind of shrugged their shoulders here because at the end, the conclusion is the Fed is going to go by 75 basis points.”
Friday’s market action comes as the S&P is riding a four-day winning streak, which is tied for its longest positive stretch of the year. The broad index is up about 1.6% for the week.
The Dow Jones Industrial Average and the tech-heavy Nasdaq Composite are up 0.8% and 3.7%, respectively, this week.
Elsewhere on Friday, shares of Levi Strauss gained more than 3% after the retailer reported quarterly earnings that exceeded expectations and boosted its dividend.
GameStop fell about 6% as the company fired its chief financial officer and said it would lay off employees as part of a turnaround plan. The stock notched a 15% gain in the prior session after the video game retailer announced a 4-for-1 stock split.
Shares of WD-40 fell more than 12% after the company reported shrinking margins during its fiscal third quarter, citing macroeconomic pressures.
The second-quarter earnings season begins in earnest next week, with reports due out from most major banks.