Despite the job market posting its worst month since January, tech stocks surged to new highs on Friday.
Stocks rose to record highs Friday after the Labor Department reported the job market's worst monthly showing since January—a worrying sign for the broader economy and the 8 million Americans still unemployed, but a strong indication the Federal Reserve could prolong the monetary stimulus measures that have lifted stocks to new highs during the pandemic. The tech-heavy Nasdaq registered its highest close ever, climbing 0.
Buoyed by gains in tech stocks like Etsy, ServiceNow and chipmaker Nvidia, the S&P 500 closed virtually flat near a record high from Thursday, ending the day at 4,535 points. Many experts attributed the gains to a disappointing unemployment report Friday morning showing the economy gained only 235,000 jobs in August, significantly lower than the nearly 750,000 additions economists expected.
In an email, Jay Pestrichelli, the CEO of West Palm Beach investment firm Zega Financial said it should put less pressure on the Fed to reduce, or taper, its monthly bond purchases of $120 billion, which started last year to help boost the market during the pandemic. Still, Pestrichelli said the report's significant slowdown in hiring marked a"worrisome" sign for the U.S. economy in light of rising inflation—a combination that sparked a decade of lackluster stock returns in the 1970s.
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