By Ankika Biswas, Lisa Pauline Mattackal and Saeed Azhar
(Reuters) -The tech-heavy Nasdaq and benchmark indexes jumped to record highs on Friday, as most megacap stocks hit all-time highs following new data that signaled U.S. labor market weakness and pulled Treasury yields lower.
The was flat as energy and financial stocks fell.
Microsoft (NASDAQ:), Meta Platforms (NASDAQ:), Amazon.com (NASDAQ:) and Apple (NASDAQ:) advanced by 1.2%-4.9% to record peaks.
This pushed information technology to an all-time high, and made S&P 500 communication services the top sector performer with a 0.6% rise to its highest level since 2000.
As of 2:29 p.m. ET, the Dow rose 16.44 points, or 0.04%, to 39,324.44. The S&P 500 gained 24.44 points, or 0.44%, at 5,561.46 and the rose 150.44 points, or 0.83%, to 18,338.74.
All three indexes remain on course for weekly gains.
Labor Department data showed U.S. job growth slowed marginally in June, and the unemployment rate rose to an over 2-1/2-year high, while wage gains slowed.
Investors expect the data could stir more active debate on interest-rate cuts when the Federal Reserve meets later this month.
Odds of the U.S. central bank delivering its first rate cut in September jumped to 79% from 66% seen before the data, CME’s FedWatch Tool showed.
“The employment data is not indicative of an imminent recession but supports the soft-landing view,” said Jack McIntyre, portfolio manager at Brandywine Global. “This clearly increases the Fed’s confidence level that policy rates are too restrictive, and they need to cut.”
Data released earlier this week also pointed to the U.S. economy losing steam, helping the S&P 500 and Nasdaq notch record closing highs during Wednesday’s holiday-shortened session.
“We’re in this kind of stagflation adjacent environment – growth is moderating, inflation is staying where it is for the time being,” said Alex McGrath, chief investment officer for NorthEnd Private Wealth.
He said the environment is not great for small caps, which are sensitive to interest rates, but the megacap stocks continue to pump out strong earnings which is keeping the market strong.
The Small Cap index is down 1.24% for the week.
Major banks fell ahead of second-quarter corporate earnings reports starting next Friday.
Higher interest rates and an uncertain economic environment are casting a cloud over U.S. bank earnings.
Bank of America, Wells Fargo and JPMorgan & Chase fell between 1.2% and nearly 2%, pushing the S&P 500 banks index down 1.5%.
Macy’s (NYSE:) on Friday jumped 10% after a report said Arkhouse Management and Brigade Capital raised their bid to buy the department store chain for about $6.9 billion.
Declining issues outnumbered advancers by a 1.17-to-1 ratio on the NYSE. On Nasdaq, declining issues outnumbered advancers by a 1.29-to-1 ratio.
The S&P 500 posted 18 new 52-week highs and eight new lows while the Nasdaq Composite recorded 38 new highs and 145 new lows.