Stocks rallied to end the week on news of a positive job report from the Department of Labor. Confirmation of progress made towards economic recovery resulted in gains across the three main indices.
The S&P 500 gained 1.95 percent on Friday and ended the week up 0.81 percent.
The Nasdaq rose 1.55 percent on Friday. Apple (APPL) and Netflix (NFLX) rose 1.07 percent and 1.0 percent, respectively, that day. The index fell 2.06 percent for the week overall. The Technology Select sector’s SPDR (XLK) rose 1.89 percent over the course of the day.
The Dow also rose 1.85 percent on Friday. The index closed the week with an overall gain of 1.82 percent.
The small-cap Russell 2000 index was up 2.11 percent that day, but fell 0.40 percent over the course of the week.
Federal Reserve Chairman Jerome Powell sparked a sell-off in the bond market and tech sector mid-week when he did not offer any new guidelines or market comment when speaking to the Wall Street Journal Jobs Summit. Many investors thought he would at least comment on the rapid rise in bond yields, but confirmed that the yield development was justified by saying he expected higher inflation by the summer. The 10-year government bond yield peaked at 1.63 percent on Friday and closed at 1.55 percent, a new 52-week high.
SPDR technology (XLK) fell 1.32 percent over the week. The subsectors were hit much harder as momentum and meme stocks were hit hard. iShares PHLX Semiconductor (SOXX) was down 9 percent on the week before dropping 4.81 percent on the week. Tesla (TSLA) fell 10.89 percent over the course of the week. This helped the popular ARK Innovation ETF (ARRKK) drop 10.25 percent over the course of the week.
Tesla (TSLA) shares lost 3.78 percent on Friday, trading at $ 597.95. This marked the first day of trading that Tesla stock closed below $ 600 in more than three months.
On Friday, gold fell 0.15 percent on a loss of $ 2.50 and closed at $ 1,698.20 an ounce. Silver also fell 0.65 percent, down $ 0.17 to close at $ 25.30 an ounce.
The US dollar index rose 1.04 percent this week. Higher interest rates make US bonds more attractive. Additionally, the Fed’s strong economic data and cautious language could generate further gains if interest rates rise and the US economy grows faster than Europe and Japan. iShares MSCI EAFE (EFA) benefited from its appreciation; it increased by 0.89 percent. iShares MSCI Emerging Markets (EEM) was slowed by its heavy exposure to China tech as they joined the global tech correction. EEM returned just 0.22 percent for the week.
The Energy Select Sector SPDR Fund (XLE) rose 3.74 percent on Friday and 9.98 percent over the week. US crude oil saw an impressive 3.84 percent surge on Friday. It gained $ 2.45 during the day to close at $ 66.28 a barrel. Announcements by the Organization of Petroleum Exporting Countries (OPEC +) that oil supplies will continue to be closely monitored helped boost crude oil prices in response. During the week, the energy increased by around 10 percent.
Higher interest rates have been good news for financial stocks. SPDR Financial (XLF) increased by 4.40 percent. SPDR Industrial (XLI) rose 3.12 percent. Vanguard Dividend Appreciation (VIG) benefited from its industrial involvement and rose 1.01 percent. iShares MSCI Edge Minimum Volatility USA (USMV) also did well, although volatility remained relatively low during the technical correction. USMV gained 1.32 percent.
The job report released on Friday exceeded consensus expectations for new jobs created during the month. The 379,000 new jobs added in February exceeded consensus projections of 200,000. The recovery in sectors hardest hit by the pandemic standstills, including tourism, entertainment and hospitality, has significantly increased the number of jobs overall. Average hourly wages rose 0.2 percent in line with consensus.
The US unemployment rate also fell from 6.3 percent to 6.2 percent in February, which still indicates plenty of room for further economic recovery before the federal government, including the Fed, eases its accommodation policy.
The ISM manufacturing PMI rose to 60.8 percent in February, beating expectations and up from January. The PMI for ISM services fell to 55.3 percent, missing expectations but still showing healthy expansion.
Construction spending rose 1.7 percent in January, more than twice as high as forecast. Vehicle sales slowed to an annual rate of 15.7 million vehicles.