US markets closed higher on Friday and Treasury yields fell after the government reported that employers unexpectedly cut 23,000 jobs last month.

Every major index notched a second straight week of gains, which included several fresh records. It marks a strong start to August following several weak months.

The S&P 500 rose 47.68 points, or 0.6 percent, to 7,757.64. That topped the all-time high it set on Tuesday. The benchmark index has been on a record run throughout the year.

The Dow Jones Industrial Average rose 151.83 points, or 0.3 percent, to 54,036.93. That put it just short of the record it set on Wednesday. The Nasdaq composite rose 342.26 points, or 1.3 percent, to 26,690.62.

Technology stocks did much of the heavy lifting for the broader market. Nvidia jumped 2.3 percent and Broadcom rose 1.7 percent.

The bond market reacted more strongly to the weaker signal on the jobs market, which can be seen as allowing the Federal Reserve more time before raising interest rates to fight inflation.

The yield on the 10-year Treasury fell to 4.64 percent from 4.67 percent just prior to the jobs update.

“Although the stock market is likely to welcome the dovish implications of the report, investors should be wary of the future growth potential of an economy where fewer people are working,” said Peter Graf, chief investment officer at Amova Asset Management Americas, in a research note.

Overall, the report paints a dimmer picture of the jobs market, which has been one of the brighter areas of the economy amid rising inflation and worries about household spending. It included a revision to the figures for June and May that involved slashing a combined 103,000 jobs from payrolls for those months.

The Fed has been holding interest rates steady amid worries about hotter inflation, fuelled by a rise in oil prices because of the US war with Iran. Wall Street expects at least one rate increase by the end of the year, with forecasts shifting for the next meeting. Expectations for a rate cut in September are down to 42 percent, from 55 percent on Thursday and from 67 percent a week ago, according to CME FedWatch.

A weakening jobs market could make matters more complicated for the Fed, which has to balance supporting job growth with fighting inflation. Raising interest rates can help tame inflation by slowing economic growth. A weaker jobs market, though, could become even shakier under higher interest rates as businesses find it more difficult to expand under increased borrowing rates.

Businesses, and Wall Street, prefer lower interest rates because it can help boost investments. That might bolster a weakened jobs market, but it could worsen already stubborn inflation.

Wall Street will get several important inflation updates next week. The most closely watched will be the consumer price index, or CPI, which measures costs for consumers. Wall Street expects it to show that inflation in July rose at a 3.4 percent rate, which would be a slight easing from the 3.5 percent rise in June. Inflation has held stubbornly above 3 percent for most of the year.

“Today’s weak payrolls print may ease the pressure on the Fed to raise rates at its September meeting, but next week's inflation data will still likely be the deciding factor,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, in a research note.

The jobs report caps a week dominated mostly by corporate earnings and concerns about the ongoing US war with Iran. (AP)


Edited by Robert Kemp