Stocks rose Friday to record levels as investors digested a key print on the U.S. labor market recovery, which pointed to a faster pace of payroll gains than expected.
The S&P 500 set another record high, kicking off the first sessions of the third quarter on a high note. The blue-chip index logged a seventh straight day of gains in its longest winning streak since August 2020. The Nasdaq also hit all-time intraday and closing highs, and the Dow gained to set its first record high since May 7. Shares of Tesla (TSLA) fluctuated before ending slightly higher after the electric car-maker's second-quarter deliveries hit a new record but still missed analysts' estimates, based on Bloomberg consensus data.
Investors considered the U.S. Labor Department's June jobs report, the central economic data point that came out this week. The print showed a stronger-than-anticipated acceleration in hiring, with non-farm payrolls rising by 850,000 for a sixth straight monthly gain. The unemployment rate, however, unexpectedly ticked up slightly to 5.9%.
"This is the 'Goldilocks report' that the market was looking for today. You had a nice print here of 850,000 jobs being added, wage pressure remaining — I wouldn't call them necessarily contained — but surprising here on the downside versus consensus estimates. So this is telling us right now that economic growth is continuing to accelerate here, the jobs market is continuing to heal," Emily Roland, co-chief investment strategist at John Hancock Investment Management, told Yahoo Finance. "We're making progress here in terms of what the Fed has set out to do, which is in order to get unemployment get down, they're going to let inflation run a little bit hot here. Not too hot, not too cold — this is just what the market wants."
Heading into the report, equities have been buoyed by a slew of strong economic data earlier this week, especially on the labor market. Private payrolls rose by a better-than-expected 692,000 in June, according to ADP, and weekly initial jobless claims improved more than expected to the lowest level since March 2020. Still, other reports underscored the still-prevalent labor supply challenges impacting companies across industries, with the scarcity capping what has otherwise been a robust economic rebound.
"It's really the labor market supply that's putting the brake on hiring right now," Luke Tilley, chief economist for Wilmington Trust, told Yahoo Finance. "But we're pretty optimistic, the market is pretty optimistic, and we think that's a big part of what's driving these indexes higher."
Friday's jobs report will also give markets a suggestion as to the timing of the Federal Reserve's next monetary policy move. For now, the Fed has kept in place both of its key crisis-era policies, or quantitative easing and a near-zero benchmark interest rate. However, an especially strong jobs report and faster-than-expected print on wage growth could justify an earlier-than-currently-telegraphed shift by the central bank.
“For the first time in years, I’m actually worried about a too hot number causing some kind of volatility or pullback in stocks. That’s because the Fed has signaled they are looking to taper QE," Tom Essaye, Sevens Report Research founder, told Yahoo Finance. "And if we get a really, really strong jobs number and a hot wage number, then markets are going to start to say gee, are they going to taper QE maybe before November, or are they going to taper it more intensely than we thought and in a market that's frankly been very calm and a little bit complacent, that could cause volatility."
Still, the Fed has suggested it would not react rashly to single reports, and has given itself leeway to adjust the timeline of its monetary policy pivots as more data comes in.
"I think everyone's counting on the Fed continuing really for the foreseeable future. So I don't see any big changes there coming before 2023," Octavio Marenzi, CEO and founder of Opimas, told Yahoo Finance. "And even then the Fed has hedged its bets very significantly — they've basically said we might in 2023 raise interest rates twice, but then again we might not. So I think the smart money is betting things are going to keep on going, they're going to carry on with a very accommodative monetary policy."
4:01 p.m. ET: Stocks close higher, S&P 500 posts longest winning streak since August 2020
Here's where markets closed out on Friday:
S&P 500 (^GSPC): +32.51 (+0.75%) to 4,352.45
Dow (^DJI): +154.4 (+0.45%) to 34,787.93
Nasdaq (^IXIC): +116.95 (+0.81%) to 14,639.33
11:53 a.m. ET: Lordstown Motors shares fall after report Justice Dept. is probing company
Lordstown Motors (RIDE) shares sank by more. than 9% intraday on Friday after the Wall Street Journal reported that the Justice Department is probing the electric-truck company. The news outlet cited unnamed people familiar with the matter.
The probe would add to an ongoing investigation by the U.S. Securities and Exchange Commission, which Lordstown previously disclosed had subpoenaed the company over issues including its descriptions to investors about preorders for its trucks.
11:08 a.m. ET: AMC shares fall after Iceberg Research reveals short position
Shares of AMC Entertainment (AMC) sank on Friday after financial firm Iceberg Research said in a Twitter post that it had taken a short position in the theater company. AMC has recently been the subject of considerable retail trader attention after becoming popularized on the Reddit forum Wall Street Bets.
"Fundamentals are obvious," Iceberg Research said in a post. "After one month of trading sideways and lots of money lost in call options, the pump seems increasingly shaky."
Shares of AMC were down as 12% intraday Friday. The shares are still up by more than 2000% after a Reddit-fueled trading frenzy earlier this year, but have lost 20% over the last month.
9:30 a.m. ET: Stocks gain after June jobs report largely tops estimates
Here's where markets were trading just after the opening bell Friday morning:
S&P 500 (^GSPC): +12.23 (+0.28%) to 4,332.17
Dow (^DJI): +57.25 (+0.17%) to 34,690.78
Nasdaq (^IXIC): +60.72 (+0.42%) to 14,588.15
Crude (CL=F): -$0.32 (-0.43%) to $74.91 a barrel
Gold (GC=F): +$17.60 (+0.99%) to $1,794.40 per ounce
10-year Treasury (^TNX): -2.4 bps to yield 1.456%
8:47 a.m. ET: Tesla's second-quarter deliveries missed estimates
Deliveries totaled 201,250 for the April through June quarter, missing expectations for 204,160, according to Bloomberg consensus data. Still, this marked a new quarterly record for vehicle deliveries for the automaker, and was sharply higher than the 90,650 reported for the same quarter last year.
As has been the case over the past several quarters, the bulk of the deliveries comprised Model 3 and Model Y vehicles at 199,360. This topped estimates for 192,920, according to Bloomberg data. Model S and X deliveries of 1,890 came up short, however, and were down 82% year-over-year.
Production during the second quarter also rocketed higher compared to last year, growing to 206,431 vehicles compared to 82,272 in the comparable 2020 quarter. This came even as Tesla, along with other major automakers, contended with global semiconductor supply constraints.
"Our teams have done an outstanding job navigating through global supply chain and logistics challenges," Tesla said in a press statement.
8:43 a.m. ET: June payroll gains exceed expectations, with economy adding back 850,000 jobs
Non-farm payrolls increased more than expected in June, reflecting an acceleration in job creation as the economic recovery picked up steam.
Payrolls increased by 850,000 in June versus the 720,000 expected, the Labor Department announced Friday morning. Friday's jobs report also came with revisions to the past two months' payrolls figures. In April, non-farm payroll additions were revised down by 9,000 to 269,000, while May's were revised up by 24,000 to 583,000.
However, the unemployment rate unexpectedly ticked up to 5.9% from the 5.8% posted in May. This also coincided with an unchanged reading in the labor force participation rate, which was 61.6% stagnated compared to May and is still depressed compared to pre-pandemic levels.
7:16 a.m. ET Friday: Stock futures gain as investors await jobs report
Here's where markets were trading ahead of the opening bell Friday morning:
S&P 500 futures (ES=F): 4,314.25, +3.5 points (+0.08%)
Dow futures (YM=F): 34,529.00, +15 points (+0.04%)
Nasdaq futures (NQ=F): 14,580.25, +31.75 points (+0.22%)
Crude (CL=F): -$0.10 (-0.13%) to $75.13 a barrel
Gold (GC=F): +$11.10 (+0.62%) to $1,787.90 per ounce
10-year Treasury (^TNX): -3.6 bps to yield 1.444%
6:15 p.m. ET Thursday: Stock futures drift lower ahead of June jobs report
Here's where markets were trading into the overnight session on Thursday:
S&P 500 futures (ES=F): 4,309.25, -1.5 points (-0.03%)
Dow futures (YM=F): 34,509.00, -5 points (-0.01%)
Nasdaq futures (NQ=F): 14,538.25, -10.25 points (-0.07%)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck