U.S. equities and stock exchange traded funds reached a new record level on Friday as industrial and technology sector advances more than made up for the perceived economic weakness on a weak jobs report.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), were 0.4% higher Friday.
Meanwhile, technology and industrial companies in the S&P 500 were both up 0.8%, leading market gains Friday.
Keeping a cap on market gains, nonfarm payrolls rose by 138,000 last month, or below the 185,000 expected increase by economists, reports Tanya Agrawal for Reuters. Furthermore, data for both March and April months was downwardly revised to show 66,000 fewer jobs created than previously reported. Nevertheless, the unemployment rate dipped to a 16-year low of 4.3% in the previous month.
Economists argue that the economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population, and gains are slowing as the labor market nears full capacity.
Given the steady improvement in the employment data, many expect the Federal Reserve will raise interest rates this month. Options traders are placing a 93.5% chance the Fed will hike rates at its June 13 to 14 meeting.
“I do believe that the June rate hike is already priced in so it probably doesn’t change what the Fed wants to do,” Neil Massa, senior equity trader at Manulife Asset Management, told Reuters. “I think what it would change, if anything, was the possibility of them accelerating the rate hikes. After this I think it makes them more likely to stay the course than to accelerate.”
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