The payrolls report came in quite a bit better than expected with an increase of some 73,000 jobs above the forecast. This lead to more record highs on both the S&P and Dow and drove the unemployment rate to a 16-month low. Once again there is a renewed confidence in the recovery evidenced by yet another rotation out of growth and into cyclical and value stocks. The Q2 profits forecast now stands at an unprecedented 92.9% with 427 S&P companies reporting and 87.6% beating forecasts, the highest on record.  Robinhood continues its rollercoaster ride, today with a boost of 7.9%, adding billions to its value this week.  But sentiment continues to be haunted by fears of inflation and a sudden tapering in Fed stimulus, which  is why the focus now will be on the Jackson Hole conference later this month when the Fed is expected to decide future stimulus strategy.  Volume remains below average at just over 8.6 billion. 

FRI  AUGUST 6, 2021  8:19 PM

S&P 500, Dow close at record highs as solid jobs data boosts cyclicals

By Echo Wang

DJ: 35,064.25  +271.58       NAS: 14,895.12  +114.58        S&P: 4,429.10  +26.44     8/5

DJ: 35,208.51  +144.26       NAS: 14,835.76  -59.36           S&P: 4,436.52  +7.42       8/6

(Reuters) - The Dow and the S&P 500 indexes closed at record highs on Friday following a stronger-than-expected jobs report, while investors shrugged off concerns over the Delta variant impacting a nascent economic recovery.  Nonfarm payrolls increased by 943,000 jobs last month, a Labor Department report showed. Economists polled by Reuters had forecast payrolls would increase by 870,000 jobs.  The Labor Department’s closely watched employment report also showed strong wage gains, as employers competed for scarce workers, and a drop in the unemployment rate to a 16-month low.

“I think that investors are now saying we’ve got renewed confidence in the economic recovery,” said Sam Stovall, chief investment strategist at CFRA. “And as a result, (investors) are rotating again into the cyclical, the value stocks, as well as the smaller-cap issues.” 

Four of the 11 major S&P 500 sectors rose, with financials posting the biggest daily percentage gain since July 20. The S&P 500 technology sector index fell.  Although the three main indexes gained for the week following a stellar corporate earnings season, sentiment has been hurt by fears of higher inflation resulting in a sudden tapering in monetary policy. For the week ended on Friday, the S&P 500 was up 0.94%, the Dow added 0.78% and the tech-heavy Nasdaq gained 1.11%.  Focus now turns to a meeting of Federal Reserve leaders in Jackson Hole, Wyoming, later this month to discuss policy and decide future stimulus strategy.

The Dow Jones Industrial Average on Friday rose 144.26 points, or 0.41%, to 35,208.51, the S&P 500 gained 7.42 points, or 0.17%, to 4,436.52 and the Nasdaq Composite dropped 59.36 points, or 0.4%, to 14,835.76.

On the earnings front, American International Group Inc rose 4.7% after it beat second-quarter profit estimates on Thursday.  Zynga Inc tumbled 18.2% after issuing a disappointing forecast for bookings and announcing a potential acquisition worth over half a billion dollars.  Corteva Inc rose 8.0% after raising its net sales forecast for the year.

Analysts expect second-quarter profit growth of 92.9% for S&P 500 companies, according to IBES data from Refinitiv. Of the 427 companies in the index that have reported earnings so far, 87.6% beat analyst expectations, the highest on record.

In other corporate news, shares of Robinhood Markets Inc surged 7.9% on Friday after a roller-coaster week in which the online brokerage was among the hottest of so-called meme stocks, adding billions to its value.

Volume on U.S. exchanges was 8.65 billion shares, compared with the 9.63 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 1.33-to-1 ratio; on Nasdaq, a 1.07-to-1 ratio favored advancers.  The S&P 500 posted 42 new 52-week highs and 1 new low; the Nasdaq Composite recorded 112 new highs and 80 new lows.