US stocks have climbed, with the S&P 500 and the Nasdaq hitting their highest levels in two weeks, as strong US jobs growth blunted the impact of an escalating US-China trade dispute.
Nonfarm payrolls increased by 213,000 jobs last month, the US Labor Department said on Friday, topping expectations of 195,000, while the unemployment rate rose from an 18-year low to 4 per cent and average hourly earnings rose 0.2 per cent.
The moderate wage growth allayed fears of a strong build-up in inflation pressures and boosted optimism that the Federal Reserve would stay on a path of gradual interest rate increases.
‘This really is the best outcome we could have hoped for, more jobs without a whole lot of wage pressures,’ said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh.
The positive news from the US employment report offset, at least for the moment, heightened trade tensions between the US and China. The two countries slapped tit-for-tat tariffs on $US34 billion ($A46 billion) worth of each other’s imports on Friday. Beijing accused the White House of triggering the ‘largest-scale trade war’.
Some investors were encouraged that the value of goods targeted for tariffs so far is smaller than amounts mentioned in previous threats. President Donald Trump has warned that the US may ultimately target more than $US500 billion worth of Chinese goods, an amount that roughly matches its total imports from China last year.
‘Even though there is an ongoing trade spat, it’s going to be measured, not $500 billion all at once,’ said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia. ‘It gives the opportunity for negotiations to happen and doesn’t torpedo the economy, which is what people were concerned about.’
The Dow Jones Industrial Average rose 99.74 points, or 0.41 per cent, to 24,456.48, the S&P 500 gained 23.21 points, or 0.85 per cent, to 2,759.82 and the Nasdaq Composite added 101.96 points, or 1.34 per cent, to 7,688.39.
All of the 11 major S&P 500 sectors posted gains.
For the week, the Dow increased 0.7 per cent, the S&P 500 rose 1.5 per cent, and the Nasdaq gained 2.4 per cent.
Although US stocks appeared minimally affected by American and Chinese tariffs going into effect, some investors warned that prolonged trade tensions could roil the markets, as they have on several occasions this year.
‘You’re going to get some stalling of the market, should trade issues begin to accelerate,’ said Gerry Sparrow, a portfolio manager for Interactive Brokers Asset Management, a Boston-based online investing company.
Shares of Biogen rose 19.6 per cent, their biggest percentage gain in more than a decade, after the company and Japanese drugmaker Eisai said their Alzheimer’s drug showed promise in a mid-stage trial. Biogen led the S&P 500 in percentage gains and was among the biggest boosts to the index.
The S&P 500 healthcare index rose 1.5 per cent, the greatest percentage gain among the S&P’s major sectors, while the Nasdaq biotech index jumped 3.7 per cent.
Besides Biogen, technology heavyweights Apple, Microsoft and Facebook provided the biggest boosts to the S&P 500. The S&P technology index rose 1.2 per cent.
Advancing issues outnumbered declining ones on the NYSE by a 2.99-to-1 ratio; on Nasdaq, a 2.32-to-1 ratio favoured advancers.
The S&P 500 posted 22 new 52-week highs and two new lows; the Nasdaq Composite recorded 125 new highs and 17 new lows.
Volume on US exchanges was 5.30 billion shares, compared with the 6.98 billion average over the past 20 trading days.