U.S. Stocks Move Modestly Higher After Seeing Initial Weakness

Stocks moved to the downside at the start of trading on Friday but have shown a notable turnaround over the course of the session. The major averages have bounced well off their lows of the session and into positive territory.

Currently, the major averages are posting modest gains. The Dow is up 141.53 points or 0.4 percent at 39,027.70, the Nasdaq is up 13.01 points or 0.1 percent at 17,186.13 and the S&P 500 is up 11.88 points or 0.2 percent at 5,364.84.

The initial weakness on Wall Street came as a Labor Department report showing much stronger than expected job growth in April offset recent optimism about the outlook for interest rates.

Selling pressure waned shortly after the start of trading, however, as the report also helped quell recent concerns about the strength of the economy.

The Labor Department said non-farm payroll employment surged by 272,000 jobs in May after climbing by a downwardly revised 165,000 jobs in April.

Economists had expected employment to increase by about 185,000 jobs compared to the addition of 175,000 jobs originally reported for the previous month.

The report also showed the annual rate of growth by average hourly employee earnings accelerated to 4.1 percent in May from 4.0 percent in April.

Meanwhile, the Labor Department said the unemployment rate crept up to 4.0 percent in May from 3.9 percent in April. The unemployment rate was expected to remain unchanged.

With the unexpected increase, the unemployment rate reached its highest level since hitting a matching rate in January 2022.

Treasury yields surged in reaction to the data, the yield on the benchmark ten-year note bouncing well off its lowest levels in over two months.

“This report places more emphasis on next week’s release of the CPI report, which could move markets in either direction and similarly modify the Fed’s stance regarding future policy,” said Quincy Krosby, Chief Global Strategist for LPL Financial

Despite the gains being posted by the major averages, gold stocks have moved sharply lower on the day, resulting in a 4.9 percent nosedive by the NYSE Arca Gold Bugs Index.

The sell-off by gold stocks comes amid a steep drop by the price of the precious metal, with gold for August delivery plunging $53.30 to$2,337.60 an ounce.

Housing stocks have also shown a significant move to the downside, dragging the Philadelphia Housing Sector Index down by 1.5 percent to its lowest intraday level in a month.

Telecom, steel and commercial real estate stocks are also seeing notable weakness, while some strength is visible among banking and pharmaceutical stocks.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. Japan’s Nikkei 225 Index edged down by 0.1 percent and Hong Kong’s Hang Seng Index fell by 0.6 percent, while China’s Shanghai Composite Index inched up by 0.1 percent and South Korea’s Kospi jumped by 1.2 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the German DAX Index is down by 0.4 percent, the French CAC 40 Index is down by 0.3 percent and the U.K.’s FTSE 100 Index is down by 0.2 percent.

In the bond market, treasuries have moved sharply lower in reaction to the stronger than expected monthly jobs data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 14.7 basis points at 4.428 percent.