Stocks rise to a record after a soft jobs report: Friday recap

Stocks climbed on Friday, and the S&P 500 finished at a record. The index rose 0.6% to 7,757.64. The Nasdaq Composite led with a 1.2% gain to 26,690.62, powered by technology and consumer shares, while the Dow Jones Industrial Average added 0.3% to 54,036.93. It was a green finish across the major benchmarks, and it closed out a strong week for stocks.

The advance was broad. Nine of the eleven S&P 500 sectors rose on the day. Consumer discretionary led, up 1.5%, with technology close behind at 1.4% and materials up 1.3%. Energy fell the most, off 1.1%, and financials slipped 0.4%. Over the full week the split was much wider. Technology gained 7.2% across the five sessions, the standout among sectors, while energy dropped 3.4% and utilities and real estate finished slightly lower.

The catalyst arrived before the opening bell. The Bureau of Labor Statistics reported that nonfarm payrolls fell by 23,000 in July, well short of the roughly 83,000 gain economists had expected, and the unemployment rate held at 4.1%. Revisions took an additional 103,000 jobs off the May and June counts, deepening the picture of a cooling labor market. Wage growth slowed too. Average hourly earnings rose 3.2% from a year earlier, the mildest annual increase in years. Investors read the softer data as easing the case for another Federal Reserve rate increase, and traders trimmed the odds of a hike at the central bank’s September meeting. Rate-sensitive corners of the market responded first. Reuters and CNBC reported the S&P 500’s close as an all-time high, topping the record the index had already set earlier in the week. It was the benchmark’s second record finish in five sessions.

The gains reached beyond the largest names. The Russell 2000 rose 1.1%, roughly matching the large-cap indices, a sign the buying was not confined to the megacaps that have carried much of this year’s advance. Smaller companies often lead when investors expect lower borrowing costs, and the day’s leadership matched that logic. Technology and consumer discretionary, the sectors most helped by cheaper credit, did the heavy lifting, while defensive groups lagged. The Cboe Volatility Index eased to 14.9, a low reading that points to little demand for downside protection. The 10-year Treasury yield sat at 4.63%, little changed on the session.

Step back and the week looks even stronger. The S&P 500 tracker gained 3.5% over the five sessions and small caps rose 3.6%, while the Nasdaq proxy did best of all, up 5.1%. Weak labor data that might ordinarily unsettle investors instead read as a case for lower rates ahead, and that has been enough to lift stocks all week.

Inflation figures and another wave of quarterly earnings sit on the calendar in the days ahead. Both feed the same question Friday’s jobs report sharpened, the one about where interest rates go from here. A softer labor market and a firm inflation reading would pull the Fed in opposite directions, and the coming releases will start to settle which force wins. The data will keep coming.

This is a general-market summary for information only — not investment advice, and not a recommendation regarding any security.