U.S. stocks jumped to record highs Friday, making their biggest gain in almost a month, after a strong jobs report for July gave investors more confidence that the economy is still growing. Financial and technology stocks soared and investors sold the safer assets they have favored for most of this year.
Banks traded higher as investors anticipated higher interest rates and bigger profits on mortgages and other loans. The Nasdaq composite closed at a record high as tech stocks continued to climb. Consumer companies also made big gains. Investors sold bonds, precious metals and shares of phone and utility companies, traditionally safer investments that soared earlier this year as investors worried about the health of the economy.
“It looks like the economy is improving. It looks like corporate earnings are on the upswing,” said Sam Stovall, U.S. equity strategist for S&P Capital IQ. That marks a change from earlier this year, he said, when investors worried the U.S. would fall into a recession and tech companies would suffer as businesses cut spending. But tech stocks have come back to lead the market higher over the last few months.
The Dow Jones industrial average rose 191.48 points, or 1%, to 18,543.53. The Standard & Poor's 500 index climbed 18.62 points, or 0.9%, to 2,182.87. The Nasdaq advanced 54.87 points, or 1.1%, to 5,221.12.
The strong jobs report suggests that Britain's vote to leave the European Union in late June didn't have much effect on hiring plans for U.S. companies. The unemployment rate remained at 4.9% and hourly pay continued to rise. The hiring spree follows an even larger surge in June and represents a turnaround from weak job growth in the first half of this year, including disappointing job gains in April and May.
Banks rose the most, as higher interest rates boost their profits on lending. Bank of America rose 57 cents, or 3.9%, to $15.05 and Citigroup climbed $1.88, or 4.3%, to $45.72.
Kate Warne, an investment strategist for Edward Jones, said the report reassured investors but won't vanquish their fears entirely.
“With an election where both candidates are likely to talk about how badly the economy is doing and how disappointing growth has been, investors as a whole are more anxious than the job picture would suggest,” she said.
The Federal Reserve has been saying for months that it intends to raise interest rates if the economy's strength warrants it. July's report provides more evidence the economy is doing well, boosting the chances that interest rates will go up. But Warne said investor views on the economy and the Fed will keep fluctuating.
“When the Fed indicates that they're data dependent, that means investors are going to be data dependent as well,” she said.
Bond prices fell and the yield on the 10-year U.S. Treasury note jumped to 1.59% from 1.50%.
Kraft Heinz, the company behind Oscar Mayer, Jell-O and Velveeta, rose 3.8% to $88.79 after it reported a larger profit than analysts expected.
After Bristol-Myers Squibb said one of its cancer drugs failed in a clinical trial, its stock suffered its biggest slump since 2000. Meanwhile, rival drugmaker Merck soared by the most in seven years.
Bristol-Myers sank 16% to $63.28 after saying its drug Opdivo did not halt progression of non-small cell lung cancer in the study. Merck, which makes a drug called Keytruda that also stimulates patients' immune systems to fight lung cancer, rose 10.4% to $63.86. Merck was the largest gainer among S&P 500 stocks, and Bristol-Myers Squibb took the largest loss.
FireEye tumbled 12.1% to $14.73 after the Milpitas, Calif., maker of security software reported weak sales, cut its forecasts and said it will eliminate up to 400 jobs.
Rival security software firm Symantec climbed 4.1% to $21.89 after the Mountain View, Calif., company disclosed better-than-expected results and gave a strong full-year profit forecast.
El Pollo Loco Holdings rose 2.8% to $13.45 after the Tex-Mex food chain, based in Costa Mesa, posted stronger results than analysts expected.
Benchmark U.S. crude slid 13 cents to $41.89 a barrel. Brent crude, used to price international oils, slipped 2 cents to $44.27 a barrel.
Wholesale gasoline held steady at $1.38 a gallon. Heating oil lost 1 cent to $1.32 a gallon. Natural gas fell 6 cents to $2.77 per 1,000 cubic feet.
Gold fell $23, or 1.7%, to $1,344.40 an ounce, its biggest loss since May. Silver fell 63 cents, or 3.1%, to $19.82 an ounce. Copper fell 2 cents to $2.15 a pound.
The dollar rose to 101.75 yen from 101.17 yen and the euro fell to $1.1091 from $1.1127.
France's CAC-40 rose 1.5% and the DAX in Germany advanced 1.4%. London's FTSE 100 was up 0.8%. The Shanghai Composite Index shed 0.2% and Tokyo's Nikkei 225 was little changed. In South Korea, the Kospi rose 0.9%.
2:20 p.m.: This article has been updated with additional information.
1:25 p.m.: This article has been updated with closing prices.
8:25 a.m.: This article has been updated with more recent prices and additional information.
This article was originally published at 7:10 a.m.