Wall Street shares held onto gains on Friday, after high dividend payers drove gains and low non-farm payrolls pointed to a possible delay in hiking US interest rates.
The S&P 500 index closed 0.4% higher at 2,179. Mid-cap and small-cap stocks both registered fresh record highs – right at the close. The S&P Midcap 400 advanced by 1% to 1,578 and the S&P Smallcap 600 ended at 761, up 1.2%.
US job creation in August stood at 151,000, well below forecast as well as the trigger the market believes would justify a rate hike as soon as at the September 21 Federal Reserve meeting.
But the market gave back some of its initial euphoria from midsession onwards, perhaps sensing it is too soon to write off a near-term rate hike. Read more.
The utilities sector led the way higher, rising by 1%. The group that is favoured for its hefty dividends and tends to perform well in a low-rate environment was hit hard in August as rate-rise expectations climbed sharply. However, sentiment appeared to shift to some extent on Friday on the back of the disappointing data.
Energy was another strong performer, also climbing by 1%, as commodity prices advanced on the back of a declining dollar.
Meanwhile, financials lagged behind the broader market – no surprise there as banks would be the most direct beneficiaries of a rise in interest rates if it happened.
Oil stocks also fared well. NRG Energy Inc (NYSE:NRG) rose by 3.3% to $11.98 and Marathon Oil Corp (NYSE:MRO) up 2.5% to $15.49 after a spike in oil prices after a depressed week for the commodity.
The West Texas Intermediate was up 2.5% to $44.25.
Midsession
US stocks came within a whisker of marking a fresh record high at midsession on Friday after US non-farm payrolls came in lower than forecast and put off the immediacy of any Federal Reserve rate hike this month.
The S&P 500 index was up 0.3% at 2,177 – the same level as where it opened just after the August payrolls data printed 151,000 jobs created against a forecast of 175,000 and expectations that a figure north of 180,000 would trigger a hike at the Fed’s Sept 21 meeting.
Earlier, the market bellwether hit 2,184 – a whisker from matching the record high marked in mid-August.
Meanwhile, the S&P Midcap 400 was up 0.7% at 1,575 and led by Denbury Resources (NYSE:DNR), up 10% to $3.18 after oil prices rally following a week of depressed levels. The US oil benchmark WTI was up 3.1% at $44.48.
The S&P Smallcap 600 was up 0.8% to 758 and led by stocks such as Pioneer Energy Services Corp (NYSE:PES), up 12.8% to $3.70, Gulfmark Offshore (NYSE:GLF) up 7.2% to $2.23, and Basic Energy Services (NYSE:BAS) up 4.4% to $0.47.
Open
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The market bellwether S&P 500 opened 0.3% higher at 2,177.49 on Friday in the wake of the lower-than-forecast August non-farm payrolls data.
The US created 151,000 jobs last month, which was less than around 175,000 that had been expected.
It comes after two straight monthly gains and could mean the Fed stands pat on rates, after many had expected a hike on September 21.
The consensus had put the figure around 175,000 and many analysts said somewhere over 180,000 or around the 200,000 mark would lead to an almost certain hike.
Meanwhile, the unemployment rate was unchanged at 4.9%.
But a broader measure of unemployment known as U6 was flat at 9.7%, the government said Friday.
In revised figures, total employment gains for July and June, meanwhile, were barely changed.
The government said 275,000 new jobs were created in July instead of 255,000. But June's gain was cut to 271,000 from 292,000.
ING Bank said: "The report doesn’t support the case for a September rate hike, probably being more consistent with our current view that 1Q17 is the more likely point the Fed chooses to raise rates.
"After all inflation pressures are very benign and the US election has the potential to weigh on sentiment and activity a touch.
"On the other hand, an increasing number of Fed speakers have suggested that they are comfortable to hike rates despite relatively subdued employment growth meaning a December move should not be ruled out."
US shares are set for a mixed picture at the open as traders are on tenterhooks waiting for the release of the non-farm jobs number.
Futures for the S&P500 are trading a tad down - 0.75 points, while the Nasdaq futures are just over four points ahead. The Dow Jones futures are seven points higher.
The job creation number will inform the decision for a Fed rate rise on September 21.
“We expect job growth of 175,000 in August. This is below the prints of the past two months but still above the amount needed for labour market slack to come down,” said Danske Bank Markets earlier.
Analysts have said a figure over 180,000 or 200,000 would lead to an almost certain US rate hike.
The FTSE 100 in London is currently up 1.07% to stand at 6,817, clawing back some of yesterday’s losses.
In the UK, the UK Markit/CIPS construction survey for August gave sentiment a small fillip.
Meanwhile, US shares closed flat yesterday after clawing back from a session of losses fed by poorly local data and worries about the outlook for interest rates after Friday’s publication of the non-farm payrolls data.
The S&P 500 index closed at 2,170 while the S&P Midcap 400 ended down 0.1% at 1,563 and the S&P Smallcap 600 closed flat at 753.
The broader small-cap Russell 2000 index punched out some light gains, up 0.02% at 1,240.
Today's market openn comes as Florida's first hurricane hits land for 11 years.