NEW YORK (AP) โ Big Tech stocks are once again driving Wall Street to record levels on Friday, even as concerns about the downside of a booming labor market keep the broader market in check.
Big gains for Meta Platforms and Amazon, which are two of the most influential stocks in the market, sent the S&P 500 index up 0.8% in midday trading and on track for another all-time high. They also sent the Nasdaq Composite up 1.4%, as of 11:30 a.m. ET.
But the Dow Jones Industrial Average, which has less emphasis on technology, rose only 14 points, or less than 0.1%, and overall on Wall Street more stocks fell than rose. The Russell 2000 index of smaller stocks fell 0.8%.
Stocks felt pressure from higher yields in the bond market after a report showed American employers hired many more workers last month than economists expected.
While the strength is a boon for workers and keeps the risk of a recession at bay, the concern is that it could keep upward pressure on inflation. That, in turn, would mean a longer wait until the Federal Reserve begins cutting interest rates.
Hopes for such cuts, which could ease pressure on the economy and boost investment prices, have been a major reason the U.S. stock market has hit record highs. Federal Reserve Chairman Jerome Powell said earlier this week that the cuts are unlikely to begin as soon as merchants expected.
"The Federal Reserve poured some cold water on the idea of โโa March rate cut less than 48 hours ago, and today's surprisingly strong jobs report won't kill things," said Chris Larkin, managing director of trade. and E-Trade investment. of Morgan Stanley.โ โDefinitely not the kind of data the Fed had in mind when it said it wanted to see more evidence that inflationary pressures were under control.โ
The 10-year Treasury yield jumped immediately after the jobs report was released, rising to 4.04% from 3.88% late Thursday.
The two-year Treasury yield, which is closer to the Federal Reserve's expectations, also rose sharply. It jumped to 4.37% from 4.21%.
Traders had already placed bets on the timing of the Fed's first rate cut in May from March, following Powell's warning earlier this week. After the jobs report, some traders moved the calendar further forward to June, according to data from CME Group.
In addition to the overall hiring figure, the jobs report included many signs that showed much stronger than expected. Workers' average hourly earnings rose more in January than expected. The unemployment rate unexpectedly did not worsen. And the government said hiring was actually much stronger in December than it had previously reported.
The question for the stock market will be whether the advantages of such strength outweigh the disadvantages. That is, will a stronger economy with many people working offset delayed or dashed hopes for quick, significant interest rate cuts?
"Big gains in payrolls and wages are not something to fear," said Brian Jacobsen, chief economist at Annex Wealth Management. "The Federal Reserve has stopped insisting that the labor market needs to weaken before inflation falls sustainably."
He pointed to a report earlier this week that showed an increase in the productivity of American workers, which could help offset the effect of higher wages.
The jobs report hit Wall Street amid a flurry of earnings reports that could have helped move the market on their own.
MetaplatformsThe owner of Facebook and Instagram, soared 20.8% after it reported stronger-than-expected earnings for the latest quarter and said it would begin paying a dividend to its investors.
Amazon rebounded 7.3% after it also reported stronger-than-expected earnings and revenue for the latest quarter.
Both are members of a small group of Big Tech stocks known as the โMagnificent Sevenโ that have been disproportionately responsible for Wall Street's run to a record high. Their huge profits have created very high expectations for their growth, which they must meet to justify the big rises in their stock prices.
Apple, another member of the Magnificent Seven, inched up 0.1% after erasing an earlier loss. It also reported better-than-expected earnings.
Cigna and Chevron rose after reporting stronger-than-expected profits for the final three months of 2023. Cigna jumped 6.6% for one of the biggest gains in the S&P 500, while Chevron rose 3.1%.
What kept Chevron's profits in check was a drop in oil prices. The benchmark US crude oil barrel sank 2.1% to $72.27. Brent crude, the international standard, fell 2% to $77.13 a barrel.
In overseas markets, shares fell 1.5% in Shanghai to cap their worst week in five years. Concerns about a faltering economic recovery and problems for the real estate industry have made the market one of the worst in the world recently.
The International Monetary Fund predicts chinese economy It would grow at a rate of 4.6% this year and 4% in 2025, compared to 5.2% last year.
Stocks were mixed elsewhere in Asia and Europe.
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AP Business writers Yuri Kageyama and Matt Ott contributed.
