Stocks ended mixed Friday, with the Nasdaq closing at a record high, as investors reacted to data showing a sharp decline in August hiring that could define the pace of Federal Reserve tapering over the coming months.
The Dow Jones Industrial Average finished down 74 points, or 0.21%, to 35,369, while the S&P 500 slipped 0.03%, and the Nasdaq ended up 0.25%.
For the week the Nasdaq rose 1.5% and the S&P 500 gained roughly 0.6%. The Dow shed about 87 points, or 0.2% for the week.
The Bureau for Labor Statistics said 235,000 new jobs were created last month, with headline unemployment rate falling to a post-pandemic low of 5.2%, less than a third of the consensus estimate of 720,000.
The BLS noted that hourly wages were up 0.6%, and 4.3% on the year, to $30.73 per hour, with both figures coming in ahead of Street forecasts. However, the BLS revised its July jobs addition estimate to 1,035,000 from its original estimate of 943,000.
“The Delta variant surge is the unsurprising story behind August’s big payroll miss,” said LPL Financial Chief Market Strategist Ryan Detrick. “Leisure and hospitality jobs, a proxy for economic reopening, were flat month over month. The good news is that we see promising signs Delta’s effect will wane in coming months and payrolls will resume growing at a fast clip.”
The softer-than-expected reading could have important implications for both the Federal Reserve's timetable on tapering -- the pace at which the central bank will slow its $120 billion in monthly bond purchases -- and the overall momentum of the post-COVID recovery over the final months of the year.
"The good news? There isn’t any. September likely will be weak too, and we’re becoming nervous about the prospects for a decent revival in October, given that behavior lags cases, and cases are yet to peak. Before Delta, we were looking for 1 million-plus payroll gains in the fall, but that’s now going to be a real struggle, suggesting that (Fed) Chair Powell will be in no hurry to be pushed into tapering while the labor market picture so uncertain," said Ian Shepherdson of Pantheon Macroeconomics. "We think the announcement comes in December, but the FOMC could easily be forced to wait until January."
MongoDB (MDB) - Get MongoDB, Inc. Class A Report shares surged after the database platform posted better-than-expected fiscal-second-quarter results and received a round of price-target hikes from analysts.
Broadcom (AVGO) - Get Broadcom Inc. Report shares rose as the network equipment and semiconductor maker forecast stronger-than-expected current quarter revenues after beating Wall Street earnings forecasts late last night.
Broadcom, a major supplier to Apple (AAPL) - Get Apple Inc. (AAPL) Report, is betting on a ramp-up in 5G investments to boost sales in its wireless division, and sees November-quarter revenues of around $7.35 billion. For the three months ending on August 1, Broadcom earned a Street-beating $6.88 per share on sales of $6.755 billion.