Updated from 1:20 p.m. ET, Friday, July 7.
Major stock indexes rose Friday, July 7, after the U.S. economy added far more jobs in June than anticipated.
The S&P 500 climbed 0.66%, the Dow Jones Industrial Average gained 0.4%, and the Nasdaq increased 1.1%.
The U.S. economy added 222,000 jobs in June, according to the latest report from the Department of Labor. Job increases were largely driven by hiring growth in the health care, financial services, and restaurant industries. Analysts expected just 177,000 new positions.
April and May's numbers were also revised higher. May's job gains were increased to 152,000 from 138,000, while April's increase was boosted to 207,000 from 174,000.
The U.S. unemployment rate was increased to 4.4% from 4.3%, while average hourly wages increased 0.2% from the previous month and 2.5% over the past year.
"It's another strong print for headline jobs but wage growth is as measly as it's been for a while," said Aberdeen Asset Management Senior Investment Manager James Athey. "Nothing here is going to dissuade the Fed from its rate-hiking cycle though. With unemployment below 4.5%, the jobs market is the least of the Fed's worries."
Trading in CME fed funds futures indicates less than a 50% chance of a rate hike at every Fed meeting before December. The chances of an increase in short-term interest rates to 1.25% to 1.5% sits at 50.9% for the last meeting of the year.
The Federal Open Market Committee, the monetary policy arm of the U.S. central bank, raised interest rates for the second time this year at its June 13-14 meeting.
Fed members have recently struck a hawkish tone. In minutes from a June policy meeting, "several" Fed members backed an unwinding of its $4.5 trillion balance sheet starting within a "couple of months." Members also indicated a willingness to continue increasing interest rates at coming meetings, even with recent softening inflation trends. The Fed has said it sees recent inflation weakness as transitory.
On Friday, the Fed again laid those intentions bare. In its semiannual monetary policy report delivered before Chair Janet Yellen's testimony to Congress, the Fed said it expects "gradual" increases in the federal funds rate and reiterated expectations that it will begin the "balance sheet normalization program this year."
Yellen is set to testify before the House Financial Services Committee on Wednesday, July 12, at 10 a.m. ET, and then in front of the Senate Banking Committee on Thursday, July 13, at 10 a.m. ET.
The technology sector was the best performer on markets Friday, leading the Nasdaq sharply higher. The sector had a rough June, pulling back from lofty heights achieved during the first several months of the year.
Tech names, particularly the FAANG stocks (Facebook Inc. (FB - Get Report) , Amazon.com Inc. (AMZN - Get Report) , Apple Inc. (AAPL - Get Report) , Netflix Inc. (NFLX - Get Report) and Alphabet Inc. (GOOGL - Get Report) ), notched solid gains on Friday. The stocks have taken a beating in recent weeks, beginning with their initial slide on June 9.
The Technology Select Sector SPDR ETF (XLK - Get Report) added 1% on Friday. Other major gainers included Microsoft Corp. (MSFT - Get Report) , Visa Inc. (V - Get Report) , Oracle Corp. (ORCL - Get Report) , Intel Corp. (INTC - Get Report) , International Business Machines Corp. (IBM - Get Report) , and Mastercard Inc. (MA - Get Report) .
Crude oil prices held lower on Friday afternoon after a weekly read on drilling activity in the U.S. showed another rise. The number of active U.S. rigs drilling for oil increased by 7 to 763 in the past week, according to Baker Hughes data. The increase reverses a small dip seen a week earlier, its first drop in 24 weeks. That decrease was only the second this year.
West Texas Intermediate crude fell 2.8% to $44.24 a barrel on Friday after rallying the day before amid a larger-than-expected drawdown in domestic supplies. U.S. inventories dropped by 6.3 million barrels in the past week, according to the Energy Information Administration.
On the international scene, world leaders convened in Hamburg, Germany, for the 12th meeting of the G20 on Friday. The two-day summit of leaders from the world's biggest economies is likely to address the escalating threat of North Korea as well as global trade and climate change.
North Korea has been on the world's radar after launching an intercontinental ballistic missile on July 4 that it says is able to carry a large nuclear warhead. The U.S. Defense Department believes the missile could reach as far as Alaska and possibly other parts of the North American mainland.
President Donald Trump and Russian President Vladimir Putin met for more than two hours on the sidelines of the summit to discuss, among other things, sanctions against Russia and the country's involvement in the fight against the so-called Islamic State.
The meeting was under the microscope as the Trump White House continues to battle allegations of collusion with the foreign government during the 2016 election. U.S. Secretary of State Rex Tillerson told reporters Friday that Trump and Putin had a "very robust and lengthy exchange" over interference in the U.S. election.
Berkshire Hathaway Inc. (BRK.A - Get Report) (BRK.B - Get Report) announced early Friday its plans to purchase bankrupt company Energy Future for $9 billion. The deal also includes the purchase of Energy Future's Oncor Electric Delivery Co., giving it an equity value of roughly $11.25 billion. The deal has an enterprise value of around $18 billion.
Texas regulators had previously blocked two attempts by others to purchase Oncor, which Reuters says is one of the biggest power transmission networks in the U.S.
Tesla Inc. (TSLA - Get Report) bounced back on Friday after briefly entering bear market territory on Thursday, July 6. The electric automaker has slumped in recent days: first, after disappointing second-quarter deliveries data and then, after failing to secure a safety award from the Insurance Institute of Highway Safety.
O'Relly Automotive Inc. (ORLY - Get Report) , Advance Auto Parts Inc. (AAP - Get Report) and Auto Zone Inc. (AZO) were on watch Friday following a bearish Bank of America Merrill Lynch note on the auto-parts retail industry. Advance Auto Parts was downgraded to "underperform" from "neutral" while both O'Reilly Automotive and Auto Zone were downgraded to "neutral" from "buy."
Winnebago Industries Inc. (WGO - Get Report) was rated a buy at Stifel Nicolaus with a $40 price target as the firm initiated coverage on the recreational vehicle manufacturer. Stifel analysts are optimistic about new product launches and the stock's valuation.
Coach Inc. (COH) moved higher after Oppenheimer raised its price target on the luxury accessories brand. Analysts are confident in the company's ability to turn its Kate Spade & Co. (KATE) acquisition into profit. Coach made its bid back in May.
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