US stocks maintained their upward momentum in late trading on Friday, with the Nasdaq Composite rising 0.8%. All three major indices remain on track to post gains for the week. The unexpected decline in July's nonfarm payrolls led traders to speculate that the Federal Reserve will hold interest rates steady.
The Dow Jones Industrial Average added 32.42 points, or 0.06%, to 53,917.52. The Nasdaq climbed 213.22 points, or 0.81%, to 26,561.58. The S&P 500 gained 24.39 points, or 0.32%, reaching 7,734.35.
Shares of Airbnb, Inc. surged 15.3% after the vacation rental company reported revenue and profit that exceeded analyst expectations. Cloudflare, Inc. shares rose more than 7% following the cloud cybersecurity firm's solid full-year and current-quarter outlook.
Meanwhile, oil prices edged lower on Friday. West Texas Intermediate crude for September delivery fell 0.6% to $76.85 per barrel, while the international benchmark Brent crude dropped 0.7% to $81.90 per barrel.
Wall Street had closed lower in the previous session as rising oil prices weighed on stocks. The Dow fell over 460 points, or 0.9%, snapping a five-day winning streak. The S&P 500 declined 0.2%, and the Nasdaq Composite slipped 0.1%.
Despite these fluctuations, stocks are still on track for a second consecutive weekly gain. The Nasdaq is poised for its best weekly performance since May, fueled by a rebound in chip stocks. The iShares Semiconductor ETF (SOXX) has gained more than 5% this week.
Market sentiment among many on Wall Street has improved this week, despite the recent pullback in US markets. Investors are hopeful that a potential agreement on passage through the Strait of Hormuz will ultimately lower oil prices and curb inflation expectations. The technology sector has been a standout, with semiconductors rebounding this week after last month's momentum trade unwinding led many to believe the market had undergone the correction needed for the next leg higher.
Strong earnings reports have further boosted recent confidence. "There's going to be a wave of buying," said Tom Lee, head of research at Fundstrat Global Advisors, on Thursday. "I think that wave of buying will push the index to 7,900, 8,000 this month."
The US economy saw an unexpected decline in nonfarm payrolls in July, while the unemployment rate edged lower, according to a report from the Bureau of Labor Statistics on Friday that signaled a slowdown in hiring. Seasonally adjusted nonfarm payrolls fell by 23,000 in July, following a revised decline of 20,000 in June. The consensus estimate from a Dow Jones survey had called for an increase of 83,000.
At the same time, the unemployment rate ticked down to 4.1%, and the labor force participation rate fell further to 61.4%, its lowest level in over five years.
In addition to the weak June and July figures, the final data for May was revised down to 63,000, a reduction of 66,000 from the previous estimate. After revisions, the 12-month average monthly job gain has fallen to just 34,000.
The decline in employment was primarily driven by a loss of 50,000 jobs in local government education and a drop of 19,000 in the retail sector. Financial activities also shed 14,000 jobs. The healthcare sector, which had been a key driver of employment growth, added only 22,000 jobs, well below its 12-month average of 36,000.
Alongside the stagnation in job growth, worker wages saw little increase for the month. Average hourly earnings rose by just 2 cents, bringing the 12-month average increase to 3.2%, below the market expectation of 3.5%.
The report comes at a time when Federal Reserve policymakers are divided on the direction of interest rates amid the current economic landscape. The labor market has improved from a sluggish 2025, while inflation remains well above the central bank's 2% target. In recent days, several Fed officials have expressed support for raising interest rates as early as September if price increases do not slow.
The Federal Open Market Committee voted 9-3 last week to keep the benchmark interest rate unchanged. Following the employment report, traders adjusted their bets on when the Fed might hike rates. According to CME Group's FedWatch tool, the probability of a rate hike in September fell to 44%, while the probability for a hike in October dropped to 58.3%.
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