US close: Stocks finish week higher on the back of in-line jobs data
Stocks finished the week on the front foot and at their session highs, despite the release of a mixed batch of economic data, helped in part by Chinese authorities' decision to step-in to brake the fall in the country's currency.
By the end of trading, the Dow Jones Industrials had advanced 0.54% or 136.42 points to 25,462.58, alongside a rise of 13.13 points or 0.46% to 2,840.35 for the S&P 500 and of 9.33 points for the Nasdaq Composite to 7,812.01.
In parallel, the yield on the benchmark 10-year US Treasury note was lower by four basis points at 2.95%, with that on two-year Treasuries down by two points at 2.64%.
Pacing gains, by industrial groups were, Food Products (2.61%), Food Producers (2.61%), Distillers (2.45%) and Computer Services (2.04%).
The US dollar/yuan exchange rate meanwhile slipped 0.23% to 6.8270.
Stocks received an unexpected boost before the opening bell as Chinese authorities announced that they would adjust their forward foreign exchange risk reserve requirement ratio from 0% to 20%, in effect raising the cost of 'shorting' the country's currency, the yuan.
Nevertheless, soon afterwards Beijing threatened to retaliate against any new US tariffs with levies of its own ranging from between 5% and 25% on $60bn of American goods.
To take note of as well, according to some market observers weakness in the yuan year-to-date had already offset the impact of the first round of US tariffs.
Commenting on the market backdrop, Craig Erlam at Oanda said: "President Trump's unpredictability on trade is keeping capital markets on the back foot and a theme that is not expected to change anytime soon.
"[...] Worries over protectionism has this week punished global stocks despite a stronger earnings season, supported lower sovereign yields and pushed G10 currency pairs to new weekly lows outright. The Chinese yuan is on track to complete an eighth week decline – its longest losing streak in 25-years."
According to the Department of Labor, the US economy generated 157,000 new jobs last month; while that was less than 193,000 print which economists had been anticipating, it was more than offset by upwards revisions to data for prior months.
Growth in average hourly earnings meantime came in at 2.7% year-on-year, the same as in June and just as expected by the consensus.
"Better than it looks: the core trend is still 200K-plus. The swing in payroll growth from 248K in June to 157K in July looks more like noise than signal, but we can't be absolutely sure, given the clear dip in the ISM non-manufacturing employment index in recent months, following the initial of tariffs," said Ian Shepherdson at Pantheon Macroeconomics.
"Other employment indicators,like JOLTS and the NFIB survey, remain very strong, though, so for now we're happy to stick to the idea that the trend remains 200K-plus."
In parallel, the ISM said its services sector PMI fell from a reading of 59.1 for June to 55.7 in July (consensus: 58.6) - its weakest level since August 2017 - with multiple survey respondents indicating that trade tensions were already impacting on their sector.
The country's shortfall in its trade with the rest of the world meanwhile widened from -$43.2bn for May to -$46.3bn in June (consensus: $46.5bn) as exports declined by 2.2% month-on-month.
Shares of Kraft Heinz rocketed. Although the company saw profits drop during its second quarter as a result of cost headwinds, they nevertheless beat analysts' forecasts.
For the three months to June, the food manufacturer posted earnings per share of $0.62, which was down from $0.94 one year ago. Yet in adjusted terms, EPS printed at $1.0, easily surpassing the 92 cents expected by the consensus.
Biogen shares on the other hand dipped, despite the company unveiling a fresh $3.5bn share repurchase authorisation from its board.
Cisco was also in the headlines after it announced the purchase of authentication services provider Duo Security for $2.35bn.
Chesapeake Energy stock was trading on the front foot as well even after delivering a mixed set of results, with EPS for the latest quarter edging past market forecasts but revenues of $2.255bn shy of the $2.269bn that analysts had penciled-in.