Stocks retreated from record highs on Friday after a strong jobs report diluted the Federal Reserve’s case for lowering rates in July. The Dow dropped 44 points, while the S&P ended the day down 0.2%. The Nasdaq Composite declined 0.1%.
Despite Friday’s losses the Dow and S&P 500 notched fresh record highs on Wednesday’s abbreviated session and ended the week up 0.9% and 1.1%, respectively. On the data front, non-farm payrolls increased by 224,000 in June, easily surpassing projections of 160,000 and recording the strongest reading since January. On average employers have added 172,000 jobs through the first half of 2019, compared to an average of 223,000 jobs per month in 2018. Average hourly earnings increased at a 3.1% annualized rate, matching the prior month’s reading, but below consensus estimates of 3.2%. Meanwhile, the unemployment rate unexpectedly ticked up from 3.6% to 3.7% in June. Treasuries weakened after yields soared in response to the robust labor market update. The yield on the benchmark 10-year note jumped eight basis points to 2.04%. Elsewhere, COMEX gold dropped 1.3% to $1,402.90/ounce.
Seven of 11 S&P 500 sectors ended the day lower with Real Estate stocks leading the declines. Financial stocks led the pack on Friday as the group stands to benefit the most from the spike in treasury yields. In M&A news, NorthStar Realty advanced 3.0% after agreeing to be purchased by AXA Financial for $17.03 a share with the deal expected to close in the fourth quarter of 2019. Meanwhile in corporate news, Deutsche Bank added 2.8% after announcing executive board restructuring.