Growth stocks led US equities higher Friday on upbeat quarterly results and as US interest rates fell back after a weaker-than-expected US employment report. The Dow Jones industrial average rose 0.5 percent, the S&P 500 gained 0.9 percent, and the NASDAQ advanced 1.5 percent.
Technology and communications services were the day's big winners after US nonfarm payrolls were reported up 559,000 in May vs. the whisper number around 800,000. A day earlier, interest rates rose and growth stocks retreated on better than expected US jobless claims and ADP private employment figures. The market had priced in a bigger rebound in job growth in May after April's disappointing result, and pushed back expectations for Federal Reserve tightening after Friday's results.
Among sectors, semiconductors led technology stocks higher, along with tech megacaps -- Apple, up 1.9 percent, and Microsoft, up 2.1 percent. Big internet stocks lifted communications services, with Facebook up 1.3 percent, Google up 2.0 percent, and Netflix up 1.1 percent. Amazon, up 0.6 percent, boosted consumer discretionary. Health care rose on a rally in medical technology. Energy rose with oil services leading.
On the downside, lower interest rates hurt banks and financials, Thursday's top performers. Transports depressed industrials, consumer staples lagged, materials were mixed, and utilities declined.
Among companies in the news, Broadcom rose 2.2 percent after an earnings beat and better guidance on strength across its business lines. Costco gained 1.0 percent after topping same-store sales expectations. On the downside, Crowdstrike, the cybersecurity business, fell 4.2 percent as traders sold on good earnings and user growth news, given its lofty valuation. Grocery Outlet fell 2.6 percent on a downgrade at Jefferies.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 34 cents to US$71.67 while spot gold rose US$20.49 to US$1,892.04. The US dollar fell vs. major currencies. The US Treasury 30-year bond yield fell 5 basis points at 2.34 percent and the 10-year note yield dropped 7 basis points to 1.55 percent.
Equities were flat to better in a mixed showing, with help from a soft US jobs report that bolstered expectations for ongoing central bank support. The Europe-wide STOXX 600 and the German DAX both firmed 0.4 percent, while the French CAC, and the UK FTSE 100 both edged up 0.1 percent.
Among sectors, best were technology, basic resources, health care, real estate, travel, chemicals, and food & beverage. Lagging were banks, oil & gas, insurance, retail, media, telecom, personal & household goods, autos & parts, utilities, and industrials. Basic resources got a boost from a rebound in industrial metals after losses lately.
Airlines suffered after the UK added several countries, including Portugal, to its list that require quarantines on return for UK travelers. IAG, owner of British Airways, fell 1.6 percent, EasyJet fell 2.5 percent, and Air France fell 2.4 percent.
Among companies in the news, AMS, the Austrian semiconductor equipment maker, rose 5.1 percent after selling its North American business. Miners BHP, up 0.9 percent, and Boliden, unchanged, were bolstered by an upgrade at BNP Paribas. On the downside, ING, the Dutch bank, fell 0.5 percent after a Barclays downgrade. French telecom Iliad declined 0.5 percent after a report that it may buy into Fibercop, a new fiber optics network.
In economic data, Eurozone retail sales were surprisingly weak in April. After a strong March when purchases rose 3.3 percent on the month, volumes slumped 3.1 percent, their worst performance since January and attributable to a tightening of Covid restrictions. Even so, with base effects very positive, annual growth climbed from 13.1 percent to 23.9 percent.
Asia/Pacific equities were mixed Friday with China and Australia better while Japan lagged.
News that China would cut its stamp duty helped Chinese markets perk up with the CSI up 0.5 percent and the Shanghai composite up 0.2 percent, though it was unclear whether it would lower trading costs, as many traders seemed to think. Among stock sectors, financials and consumer staples fared best while energy and utilities slipped. News that President Biden had expanded the list of Chinese firms subject to a US investment ban weighed on risk appetite, as it includes all the major Chinese telecom companies.
Hong Kong ended lower with the Hang Seng index down 0.2 percent, with tech and telecom firms suffering from the US investment ban. Among companies in focus, Tencent fell 0.7 percent and Baidu was off 3.1 percent.
Japanese equities were mixed with value beating growth stocks, with the Nikkei down 0.4 percent and the broader Topix flat. Trading was quiet ahead of the US employment report. Outperformers were materials, shipping, and textiles. Lagging were banks, utilities, and communications services.
Australian markets gained with the All Ordinaries up 0.4 percent, as most sectors gained, with utilities and health care leading. Banks outperformed too as bond yields edged up again, while refiners and liquified natural gas producers boosted energy. On the downside, materials lagged as iron ore miners fell back and precious metals weakened. Covid headlines were mixed, as Covid cases declined but the government warned about the presence of new more contagious variants.
Indian shares slipped after the Reserve Bank of India kept rates steady with a move to expand its quantitative easing program. The BSE Sensex fell 0.3 percent and the Nifty eased 0.1 percent, with banks lagging while materials and property stocks outperformed.
In economic data, Japanese household spending was nearly flat in April, up a seasonally adjusted 0.1% after +7.2% in March, +2.4% in February and -7.3% in January. Year-over-year, spending picked up from a 6.2 percent rise in March to 13.0 percent jump in April, largely reflecting base effects from severe weakness in spending 12 months earlier during the start of the Covid-19 pandemic.