Shares rose on Friday, paring the week’s losses, as August jobs report arrived pretty much as expected. The data eased fears that a warmer labor market would give the Federal Reserve room to become more aggressive with its rate hikes.
The Dow Jones Industrial Average rose 197 points, or 0.6%. The S&P 500 rose 0.8% and the Nasdaq Composite gained 0.7%.
Investors were comforted by the much-anticipated jobs report, which showed the economy added 315,000 jobs for the month, just below the Dow Jones estimate for 318,000. Steve Sosnick, chief strategist at Interactive Brokers, called it a “Goldilocks” report.
“Not too hot. Not too cold. It’s just around expectation. There’s nothing here that takes 75 [basis points] off the table,” he said. “A number that is within expectations does not change anything. What we see now is a relief rally.”
The unemployment rate reached 3.7%, two tenths of a percentage point higher than expected. The August report is particularly important because it is one of the last major economic reports the Fed will assess before raising rates at its September meeting. This data point could help the central bank determine whether a 75 basis point hike.
The last major economic report of note is the August CPI from September 13 and is more likely to determine how aggressive the Fed needs to be in the short term.
The Dow Jones and S&P 500 ended the day higher in the previous session to kick off September, snapping four days of losses. Still, the major averages are expected to end the week down and record their third consecutive negative week, after falling in the final days of August. The Dow and S&P are expected to post a weekly decline of more than 1.5%. The Nasdaq Composite is expected to fall 2.5% this week.
Stocks were weighed down by hawkish comments from Federal Reserve officials signaling that interest rate hikes aren’t going away any time soon. Now traders are watching to see if stocks will retest June lows, especially since September has historically been a poor month for the market.
Retailer actions lululemon jumped almost 10% after publish quarterly results above Wall Street expectations.
—CNBC’s Patti Domm contributed reporting.