S&P 500, Nasdaq Score New Record Highs as Jobs Report Supports Economic Recovery

New York (Aug 6)  Stocks secured robust gains by market close Friday after the latest labor market snapshot breezed past expectations, providing evidence for the U.S. economic recovery.

The S&P 500 was up 0.86%, hitting an all-time record close of 2,182.86. The Dow Jones Industrial Average added 1.04%. The Nasdaq climbed 1.06%, scoring a record close of 5,221.12.

The U.S. economy added 255,000 jobs in July, according to the Labor Department, far higher than an expected increase of 185,000. The U.S. unemployment rate was unchanged at 4.9%, higher than an expected decline to 4.8%. June's jobs gain was revised up to 292,000 from 287,000, while May's jobs were more than doubled to 24,000 from 11,000. Hourly wages rose 2.6%.

"On the whole, this morning's strong July employment report indicates that labor market health remains intact and, in our view, reduces near-term recession risk for the U.S. economy," Jesse Hurwitz, U.S. economist at Barclays Capital, wrote in a note. "Furthermore, the print should boost FOMC members' confidence in the outlook."

The latest strong showing from the labor market for July, plus upward revisions for June and May, increases the chances the Federal Reserve will hike rates at the next meeting. The Fed's Federal Open Market Committee will next meet in September.

Crude oil was slightly lower on Friday after a weekly read on domestic drilling activity showed another increase in the number of active oil rigs. The number of active U.S. oil rigs increased by 7 to 381 in the past week, according to Baker Hughes. Activity has risen for six weeks in a row.

Source: TheStreet