The US markets closed higher on Friday, with the Dow ending at a record for an eighth straight session following a read on the labor market that came in above expectations, a sign that current valuations may be supported by current economic activity. The Atlanta Federal Reserve’s GDP Now forecast model showed that the US economy is on track to grow at a 3.7 percent annualized pace in the third quarter, following the release of the government’s July payrolls report. The latest third-quarter gross domestic product estimate was weaker than the previous one for 4.0 percent growth.
Also, the US labor market showed little sign of exhaustion nine years into an economic recovery as the economy added an impressive 209,000 new jobs in July. The US has created nearly 450,000 new jobs in the past two months, knocking the unemployment rate back down to a 16-year low of 4.3%. A steady flow of new jobs has added fresh fuel to a recovery that is one of the longest on record. More Americans working and bringing home paychecks has spawned higher consumer spending and kept the economy on an even keel. Pay rose 0.3% in July to an average of $26.36 an hour. But over the past 12 months, wages have risen just 2.5%, the same as in the prior month. Wages usually rise 3% to 4% a year when an economy was is running at full throttle.
Meanwhile, the trade deficit shrank nearly 6% in June to an eight-month low, but the US is still on track to post a bigger gap in 2017 than it did the year before. The deficit fell to $43.6 billion in June from $46.4 billion in May. In June, exports rose 1.2% to $194.4 billion and hit the highest level since the last month of 2014. The US boosted shipments of soybeans, autos and fuel oil. Imports slipped 0.2% to $238 billion, reflecting declines in crude oil and cellphones sent to the US.
The Dow Jones Industrial Average added 66.71 points or 0.30 percent to 22,092.81, the Nasdaq gained 11.22 points or 0.18 percent to 6,351.56, while the S&P 500 edged higher by 4.67 points or 0.19 percent to 2,476.83.