The Week In Review
The major averages closed mixes with the Dow Jones Industrial Average retreating on Friday and the S&P 500 slipped from a record high after the August jobs report came in short of expectations, showing the impact of the delta-fueled Covid resurgence.
The Dow lost 75 points, or 0.2%, while the S&P 500 edged lower by less than 0.1% after holding a slight gain in afternoon trading. The broader market index was supported by tech stocks, which helped to lift the Nasdaq Composite by 0.2%.
Nonfarm payrolls increased by 235,000 in August, the Labor Department said Friday. Economists surveyed by Down Jones were expecting 720,000 jobs. The report marks a significant slowdown from July's revised number of 1.053 million and comes as the delta variant of Covid-19 has led to health restrictions being put back in place in some states and cities.
Federal Reserve Chairman Jerome Powell has emphasized the need for more strong jobs data before the central bank would start to unwind its massive bond-buying program, and the disappointing report could change expectations about when the Fed will start its tapering process.
The report raises questions about the long-term growth trajectory for the U.S. economy, but the impact of the Fed appeared to be offsetting that in Friday's trading, said Yung-Yu Ma, the chief investment strategist at BMO Wealth Management.
The central bank will also be looking at how much Covid impacted hiring and activity during August. The virus variant has been a wild card for the economy, and its impact could be a factor that sways the Fed as it considers the first step away from the easing policies. Leisure and hospitality, which is the sector hit hardest by the pandemic in 2020, added zero jobs in August, according to the report.
Slight gains for megacap tech stocks including Apple and Microsoft supported the market indexes. Home builder stocks including Lennar and PulteGroup were under pressure, along with cruise stocks. American Express was the worst performing component in the Dow.
In a press conference on Friday, President Joe Biden touted the average monthly job gains since he took office and lower weekly jobless claims, and called for more vaccinations and for Congress to pass infrastructure and budget bills. Biden also said states should consider using federal relief money to extend enhanced unemployment benefits, which expire this week.
The S&P 500 and Nasdaq started September on a strong foot and closed at record highs on Thursday. The S&P 500 and the Nasdaq Composite have rise 0.6% and 1.3% so far this week. The Dow is about flat since Monday.
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