US Markets

Stocks rise as Wall Street cheers jobs report, shrugs off trade fears

Key Points
  • The U.S. economy added 213,000 jobs in June, while economists polled by Reuters expected a gain of 195,000, lifting investor sentiment.
  • Wall Street also shrugged off worries of a trade war between the U.S. and China, despite both countries officially implementing tariffs on against each other.
Dollar and trade war causing collateral market damage
Dollar and trade war causing collateral market damage

Stocks rose on Friday on the back of stronger-than-expected employment data. Investors also shrugged off concerns over an escalating trade war between the U.S. and China.

The Dow Jones Industrial Average jumped 99.74 points to 24,456.48, with Apple and Microsoft outperforming. The closed 0.8 percent higher at 2,759.82, with health care rising 1.5 percent. The Nasdaq composite climbed 1.3 percent to 7,688.39 as the iShares Nasdaq Biotechnology ETF (IBB) surged 3.8 percent. Facebook rose to an all-time high, also boosting the Nasdaq.

The U.S. economy added 213,000 jobs in June, while economists polled by Reuters expected a gain of 195,000.

“I think the report is more encouraging than discouraging because it suggests we have a bit more slack in the economy than we expected,” said Bruce McCain, chief investment strategist at Key Private Bank. “I don’t think this (report) is extreme enough to be considered Goldilocks, … but it’s still good.”

Unemployment, however, rose slightly to 4 percent from 3.8 percent. Wage growth also missed expectations, climbing 2.7 percent on a year-over-year basis. Economists expected growth of 2.8 percent.

"The unemployment rate went up for the right reason: more people coming into the work force," said Eric Souza, senior portfolio manager at Silicon Valley Bank. "It was a good report, but what would've made it a great report is if we saw wages rise a bit more."

The jobs report comes a day after the Federal Reserve released a summary from its most-recent meeting. The minutes showed some officials were concerned that "a prolonged period in which the economy operated beyond potential could give rise to heightened inflationary pressures."

"A strong June labor report, coupled with upward revisions for April and May, gives the Fed a solid rationale for continuing with rate increases this year," said Quincy Krosby, chief market strategist at Prudential Financial. "Nonetheless, wage growth remains stubborn, and the potential for an enduring trade war could — and perhaps should — give the Fed reason for pause."

A trader works on the floor of the New York Stock Exchange.
Michael Nagle | Bloomberg | Getty Images

Stock futures pared losses after the report's release. Initially, stock futures slipped after U.S. tariffs on $34 billion of Chinese goods came into effect earlier on Friday. China responded to the fresh tariffs by imposing its own retaliatory levies on imports from the States.

A spokesperson for China’s Ministry of Commerce stated Friday that while Beijing had refused to “fire the first shot,” it was obligated to counter the U.S.’ actions after Washington “launched the largest trade war in economic history.”

“As long as the negotiations are more tit-for-tat than a cannonball into the pool, ... I think the market will be fine,” said Eric Freedman, chief investment officer at U.S. Bank Wealth Management.

Boeing rose 0.4 percent, erasing earlier losses. Caterpillar and General Motors, meanwhile, closed off their lows of the day. These companies are sensitive to trade news because of their overseas revenue exposure.

President Donald Trump, however, floated the idea of slapping tariffs on an additional $500 billion worth in Chinese goods. “The market is not priced in for that,” said Freedman. “It’s not even close.”

Trade-war fears have been simmering for months, keeping market gains in check as investors fret over the impact of tariffs on corporate profits.

Biogen shares rose nearly 20 percent after the company announced positive results from a study on a drug aimed .

—CNBC’s Sam Meredith and Jeff Cox contributed to this report