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Benchmarks closed mostly higher on Friday after market watchers played down chances of a possible rate hike by the Fed following desultory nonfarm payrolls data for August. While payrolls additions were lower than expected, the unemployment rate increased 0.1%. Meanwhile, the ISM Manufacturing Index hit a six year high for the month of August.
The Dow Jones Industrial Average (DJIA) closed at 21,987.56, gaining 0.2%. The S&P 500 Index (INX) increased 0.2% to close at 2,476.55. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,435.33, increasing 0.1%. Advancing issues outnumbered decliners on the NYSE by 1,850 to 934. On the Nasdaq, advancers outnumbered decliners by 1,711 to 1,033.
Rate-hike Chances Decline after Desultory Job Data
Markets closed higher on Friday after market watchers played down chances of a possible interest rate hike by the Fed, following desultory nonfarm payrolls data for August. According to the Bureau of Labor Statistics, a total of 156,000 jobs were added to the U.S. economy in August, missing the consensus estimate of 180,000 new jobs additions for the period. Meanwhile, the unemployment rate increased 0.1% to reach 4.4%, up from 4.3% last month when it hit a 16 year low. The consensus estimate for the jobless rate for the period was 4.3%, consistent with previous month’s data.
Manufacturing sector alone added 36,000 jobs last month, which brought up the total number of job additions to 156,000. Average hourly earnings increased 0.1% in August, whereas the consensus estimate for the period was 0.2% for the period.
ISM Manufacturing Index Hits Six-Year High
The ISM Manufacturing Index increased to 58.8% in August, up from 56.3% in July, whereas the consensus estimate for the period was a decline to 56.2%. This marks its highest reading experienced in more than six years since April 2011. Such a figure was achieved primarily due to the contribution from the industrial sector. The new-orders index fell a paltry 0.1 point to 60.3%. Also, the production index gained meagerly to reach 61% while the employment index increased almost 5 points to 59.9%.
However, construction spending for July decreased 0.6%, whereas the consensus estimate for the period predicted an increase of 0.3%. However, the metric was up 1.8% year-over-year. According to the Commerce Department, public construction spending dipped 1.4% in July and private construction spending was down 0.4% for the period. Economists suggest that this decline was due to a dip in construction outlays.
For the week, the Dow, the S&P 500 and the Nasdaq increased 0.8%, 2.7% and 1.4% respectively. During this period, Hurricane Harvey pummeled Houston and forced major oil-refineries in the area to shut down. Moreover, North Korea test fired a ballistic missile over Japan, landing in the Pacific Ocean. This increased geopolitical instability in the Korean Peninsula and raised tensions between the U.S. and North Korea. Meanwhile, speaking to CNBC, U.S. Secretary of State, Steven Mnuchin said the Trump administration has presented a detailed tax plan to the Congress which they expect to sign into law by the year end.
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