Strong jobs report sends most stocks, bond yields higher

Treasury yields are powering higher Friday, and stock indexes are holding close to their record highs on Wall Street after a report showed the U.S. job market is making widespread improvements.

The S&P; 500 was virtually unchnaged after the first half hour of trading, a day after setting another all-time high. The Dow Jones Industrial Average was up 92 points, or 0.3%, at 35,156, as of 10 a.m. Eastern time, and the Nasdaq composite was 0.4% lower.

Some of the sharpest action was in the bond market, where Treasury yields tend to move with expectations for the economy and for inflation. The yield on the 10-year Treasury climbed to 1.28% from 1.21% late Thursday, clawing back all the losses it sustained over the last week.

Yields jumped as economists said Friday’s encouraging jobs report will give the Federal Reserve another nudge to pare back its bond-buying program, which is trying to juice the economy by keeping longer-term rates low. Economists say an announcement by the Fed about a possible slowdown in purchases could come as soon as the end of the month.

Friday’s jobs report showed that hiring was stronger than economists expected, with employers adding 943,000 workers to their payrolls. Average wages also jumped 4% in July from a year earlier, more than economists expected.

Most stocks across Wall Street rose following the report, with companies whose profits are most closely tied to the strength of the economy leading the way.

Energy producers and financial comapnies within the S&P; 500 each rose at least 1%. The smaller stocks in the Russell 2000 rose 0.3%, more than their bigger rivals.

But the better-than-expected data on the economy took momentum out of technology stocks, which have been some of Wall Street’s biggest winners since the pandemic.

They’ve been big beneficiaries of the ultra-low interest rates the Federal Reserve has brought about. When bonds are paying little in interest, investors are willing to pay higher prices for other kinds of investments, particularly stocks of companies with big earnings growth forecast far in the future.

A rise in interest rates could undercut those stocks, or at least add a headwind that has been largely absent for more than a year. A slowdown in bond purchases by the Fed would be the first step toward raising short-term interest rates off their record low of nearly zero.

That’s why the Nasdaq struggled more than indexes Friday. It’s also why the benchmark S&P; 500 was making only listless moves, even though three out of five stocks within the index were rising.

Apple, Microsoft, Nvidia and other technology stocks make up 28% of the S&P; 500 by market value, more than double the weight of any of the other 10 sectors that comprise the index. That doesn’t even include some big tech-oriented companies like Amazon and Tesla.

Those five companies were the biggest weights on the S&P; 500 in morning trading.

The biggest gain in the S&P; 500 came from Corteva, an agricultural company spun off from DowDuPont. It jumped 6.7% after reporting stronger revenue and earnings for the latest quarter than Wall Street expected.

That’s been the norm for this earnings reporting season. Close to 90% of the companies in the S&P; 500 have told investors how much profit they earned during the spring, and their earnings were roughly double what they were a year ago.

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AP Business Writer Joe McDonald contributed.

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