The three major Wall Street indices closed in the green on Friday after weaker-than-expected US employment data reduced expectations for Federal Reserve rate increases in the near term. The S&P 500 rose 0.62% to a record 7,757.64, while the Nasdaq Composite gained 1.3% to 26,690.62 and the Dow Jones Industrial Average increased 0.28% or 151.83 points to 54,036.93.
The three indices posted gains over two consecutive weeks with their best weekly performance since April. The S&P 500 gained 3.6% over the week, the Nasdaq Composite rose 5.2%, and the Dow Jones increased nearly 3%. Nasdaq's gains were driven particularly by the semiconductor sector, with the iShares Semiconductor ETF rising more than 7% during the week.
Non-farm payroll data showed the US economy only lost 23,000 jobs in July, contrary to economists' consensus which had expected a gain of 83,000 jobs. The unemployment rate did fall to 4.1% from an expected 4.2%, but this decline came alongside a weakening labour force participation rate to its lowest level in more than five years.
The data led market participants to assume the Fed will maintain its benchmark rate in the 3.50%-3.75% range at its September meeting. Based on CME FedWatch, the majority of interest rate futures traders now expect the Fed to hold rates at that level, different from the previous day when the market estimated a 55% probability of a 25 basis point increase.
Software stocks led the gains on Friday after recent earnings reports eased investor concerns about artificial intelligence potentially disrupting the industry. Atlassian shares surged 35% after fourth-quarter adjusted earnings and revenue exceeded expectations, while Cloudflare rose more than 5% and Airbnb gained 17% after posting better-than-expected results.
Oil prices also rose slightly amid investor anticipation of a potential deal between the United States and Iran that could reopen the Strait of Hormuz. West Texas Intermediate futures for September delivery rose 1.15% to US$78.18 per barrel, while Brent crude gained 1.29% to US$83.55 per barrel.
