U.S. payrolls report boosts dollar, equities, bond yields
The U.S. Labor Department said nonfarm payrolls rose by 209,000 jobs last month. June's employment gain was revised up to 231,000 from a previously reported 222,000. The unemployment rate fell to 4.3 percent while average hourly earnings rose 0.3 percent, the largest increase in five months.
The report may pave the way for the U.S. Federal Reserve to start shrinking its $4.2 trillion balance sheet.
U.S. stocks retreated from early highs to keep a gauge of world stocks near the unchanged mark, although the index remained on track for its fourth straight week of gains. The report also bolstered the dollar from 15-month lows against a basket of major currencies.
"It really reinforces a lot of the themes we’ve seen - which is you will continue to see solid, steady growth that is not knocking the cover off the ball, led mainly by the labor market, which is healthy, and consumption, which should continue," said Sameer Samana, global quantitative analyst at Wells Fargo Investment Institute in St. Louis.
"For financial markets, for right now, it’s a good combination – good growth that is not leading to inflation."
The Dow Jones Industrial Average rose 66.71 points, or 0.3 percent, to 22,092.81, the S&P 500 gained 4.67 points, or 0.19 percent, to 2,476.83 and the Nasdaq Composite added 11.22 points, or 0.18 percent, to 6,351.56.
Financials, up 0.72 percent, were the best performing S&P sector, but gains on the broader S&P 500 were curbed by a decline in healthcare names, and a 13.83 percent drop in Viacom.
The pan-European FTSEurofirst 300 index rose 0.99 percent and MSCI's gauge of stocks across the globe gained 0.04 percent.
The FTSEurofirst notched its best day since July 12 while the Dow scored its ninth straight day of gains, and eighth straight closing record.
The greenback was on pace for its biggest daily percentage gain since Jan. 6 and its first weekly gain in four, buoyed by the jobs report and comments from National Economic Council director Gary Cohn that the U.S. administration is working on a tax plan that would bring corporate profits back to the United States.
The dollar had been weakening on political uncertainty in Washington, including news on Thursday that a grand jury had issued subpoenas relating to an investigation of suspected Russian meddling in the 2016 U.S. election.
The dollar index rose 0.66 percent, with the euro down 0.72 percent to $1.1782.
In bond markets, traders were betting the payrolls figures would cause the Fed to start to trim its balance sheet next month while a rate hike later this year could not be ruled out.
Benchmark 10-year U.S. Treasury notes fell 10/32 in price to yield 2.2637 percent, from 2.228 percent late on Thursday.
Oil prices rose on Friday as the jobs report bolstered hopes for rising demand but declined on the week, weighed down by strong U.S. output and rising OPEC exports.
U.S. crude settled up 1.1 percent at $49.58 per barrel and Brent settled up 0.8 percent at $52.42.
(Editing by Bernadette Baum and James Dalgleish)
By Chuck Mikolajczak