Stocks hit record, US dollar strengthens after jobs data

By Chuck Mikolajczak

NEW YORK (Reuters) -Global stocks climbed to a record for a second straight session on Thursday and the dollar rallied after a stronger than expected U.S. payrolls report indicated the labor market may not be deteriorating rapidly.

The Labor Department said nonfarm payrolls increased by 147,000 jobs last month after an upwardly revised 144,000 advance in May, well above the 110,000 estimate of economists polled by Reuters.

Markets dialed back expectations for rate cuts this year from the U.S. Federal Reserve in the wake of the data, with the nearly 25% chance for a cut all but evaporating, while expectations for a September cut are down to about 75% from nearly 98% before the jobs report was released, according to LSEG data.

"July cut is definitely off the table. I was surprised like everybody to get such a strong number," said Sandy Villere, Portfolio Manager with Villere & Co in New Orleans.

"I'm not going to say Goldilocks, but it's pretty amazing given all the crosscurrents, from tariffs to DOGE to whatever. I don't see how you could possibly cut with this strong of a labor market, so pretty amazing."

On Wall Street, the S&P 500 and Nasdaq Composite once again closed at record levels, led by gains in technology as Nvidia shares rose 1.3% as it approached a $4 trillion market capitalization.

Other economic data from the Institute for Supply Management (ISM) showed U.S. services sector activity picked up in June as orders rebounded, but employment contracted for the third time this year.

The Dow Jones Industrial Average rose 344.11 points, or 0.77%, to 44,828.53, the S&P 500 rose 51.93 points, or 0.83%, to 6,279.35 and the Nasdaq Composite rose 207.97 points, or 1.02%, to 20,601.10. 

For the week, the S&P 500 gained 1.72%, the Nasdaq rose 1.62%, and the Dow climbed 2.3%.

MSCI's gauge of stocks across the globe rose 5.99 points, or 0.65%, to 926.47 after hitting a record 926.79, and was up 0.3% on the week.

The pan-European STOXX 600 index closed up 0.47%, led by gains in bank stocks, to manage a slight gain for the week.

The dollar strengthened in the wake of the payrolls data, with the dollar index, which measures the greenback against a basket of currencies, up 0.38% to 97.12, with the euro down 0.37% at $1.1754.

The dollar was on track for a second straight gain after nine consecutive sessions of declines, and was down 0.1% on the week.

Against the Japanese yen, the dollar strengthened 0.95% to 145.03. Bank of Japan board member Hajime Takata said the central bank should resume interest rate hikes following a temporary pause to evaluate the impact of U.S. tariffs, signaling optimism the country was on track to durably achieve the central bank's price goal.

Sterling strengthened 0.07% to $1.3645 after a sharp selloff in the prior session across UK assets fueled by fiscal concerns and uncertainty about Rachel Reeves' future as Britain's finance minister.

U.S. Treasury yields jumped following the jobs data, before easing somewhat. The yield on benchmark U.S. 10-year notes rose 5.3 basis points to 4.346% while the 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, shot up 9.7 basis points to 3.886%. 

For the week, the 10-year yield rose 6.3 basis points while the 2-year yield was up nearly 14.6 basis points.

U.S. crude fell 0.65% to $67.01 a barrel and Brent fell to $68.79 per barrel, down 0.46% on the day.

(Reporting by Marc Jones; editing by Philippa Fletcher and Marguerita Choy)