Dow and S&P 500 eke out their sixth straight gains as investors await stimulus deal

The U.S. economy added nearly 1.8 million jobs in July—Three experts break down the latest jobs report
The U.S. economy added nearly 1.8 million jobs in July—Three experts break down the latest jobs report

The Dow Jones Industrial Average and S&P 500 eked out small gains on Friday, shaking off concerns over rising U.S.-China tensions and ongoing coronavirus stimulus negotiations.

The 30-stock Dow closed 46.50 points higher, or 0.2%, at 27,433.48. The S&P 500 ended the session up 0.1% at 3,351.28. Those gains were enough to stretch their winning streaks to six days. 

The Nasdaq Composite lagged, falling 0.9% to 11,010.98 and snapping a seven-session winning streak. Amazon and Netflix fell 1.8% and 2.8%, respectively. Microsoft dropped 1.8% and Apple slid 2.3%.

President Donald Trump on Thursday night issued executive orders to address "the threat posed" by Chinese apps TikTok and WeChat. As part of the order, any transaction with ByteDance and Tencent, the parent companies of TikTok and WeChat, respectively, will be barred in 45 days.

It comes as tensions between Washington and Beijing continue to escalate over several issues including the origins of the coronavirus and democracy in Hong Kong. The U.S. on Friday sanctioned Hong Kong Chief Executive Carrie Lam

Stimulus talks fall apart

Meanwhile, talks between the White House and Democratic leaders fell apart as the two sides can reach a deal on a new coronavirus stimulus package. 

House Speaker Nancy Pelosi said late Friday that she told the White House to come back to the table with a higher number for the relief package. Meanwhile, Treasury Secretary Steven Mnuchin said no progress was made. 

Mark Meadows, the White House chief of staff, said: "I'm extremely disappointed that we came up here today just to hear the same thing repeated over and over again, which is the same thing we've heard repeated for the last two weeks." He added the administration would "take executive orders to try to alleviate some of the pain that people are experiencing."

One of the key sticking points in the negotiations has been $600-per-week enhanced federal unemployment benefit that expired at the end of July. Democrats want to extend the benefit for the same amount while Republicans want a reduced weekly rate. 

"In order for stocks to move higher, we do need a fiscal policy package in the $1.5 trillion range," said Michael Arone,  chief investment strategist at State Street Global Advisors. "Without that the economy is likely to retrace. This recovery will stall without one."

U.S. jobs report easily tops expectations

The U.S. economy added 1.763 million jobs in July, the Labor Department said Friday. Economists polled by Dow Jones expected a gain of 1.4 million. The U.S. unemployment rate was also better than expected, falling to 10.2%. The jobs reports for June and May were also revised sharply higher. 

Seema Shah, chief strategist at Principal Global Investors, said the report is a welcomed surprise for investors as "expectations of a negative jobs print had been hanging over investors for the past month." However, Shah added Friday's number does not "imply economic conditions are significantly improved."

"It simply suggests the labor market was static in July, showing no signs of renewed weakness that the increase in COVID-19 cases had threatened," she said. "Nonetheless, with Congress failing to agree on a new fiscal stimulus package yet, the risk is that a policy failure drains the tentative strength that had been creeping back into the economy in recent months."

—CNBC's Patti Domm contributed to this report.

Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the worlds