USA: Employment Increased, Wall Street Rose

On Wall Street, stock prices rose significantly on Friday for the second consecutive day, as strong data from the U.S. labor market encouraged investors, pushing the trade war between the U.S. and China to the background.

The Dow Jones strengthened by 0.41 percent to 24,456 points, while the S&P 500 rose by 0.85 percent to 2,759 points, and the Nasdaq index increased by 1.34 percent to 7,688 points.

The rise in stock prices across all 11 major sectors of the S&P 500 index is primarily attributed to better-than-expected data from the U.S. labor market.

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In June, the number of employed increased by 213,000, while analysts had expected 195,000. And while the unemployment rate rose from 3.8 percent, the lowest level in 18 years, to 4 percent, the average hourly wage increased by only 0.2 percent, less than expected.

The increase in employment indicates strong economic growth, while the modest wage growth alleviates fears of a rapid increase in interest rates by the U.S. central bank.

“These are better numbers than we hoped for, more jobs without any inflationary pressures from wage growth,” says Kim Forrest, an analyst at Fort Pitt Capital Group.

Thanks to this, concerns about escalating trade tensions between the U.S. and China have taken a back seat.

Yesterday, tariffs of 25 percent imposed by Washington on the import of more than 800 Chinese products worth $34 billion came into effect, and Beijing responded with countermeasures of the same intensity.

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Investors fear that this is the first move leading to a trade war between the U.S. and China, which could disrupt the growth of both economies and the entire global economy.

Some analysts say that this has already been factored into stock prices and that the amounts on which tariffs were imposed could have been significantly higher, considering that Washington had announced tariffs on imports of Chinese products worth $500 billion.

“Although the trade dispute will continue, it will be measured, not $500 billion at once. This leaves room for negotiations and will not torpedo the economy, which investors feared,” says Jamie Cox, a partner at Harris Financial Group.

Thanks to the rise in stock prices over the past two days, the Dow Jones strengthened by 0.7 percent over the past week, while the S&P 500 rose by 1.5 percent and the Nasdaq index by 2.4 percent.

European stock prices also rose yesterday. The London FTSE index strengthened by 0.19 percent to 7,617 points, while the Frankfurt DAX rose by 0.26 percent to 12,496 points, and the Paris CAC increased by 0.18 percent to 5,375 points.