Stock Market Today: Strong July Jobs Report Has a Dark Side

A better-than-expected employment report that saw 1.8 million U.S. jobs added in July didn't give the markets much of a boost Friday.

(Image credit: Getty Images)

Wall Street got the July jobs report it was hoping for, but the market didn't do much with it.

The Labor Department on Friday reported that the unemployment rate dropped to 10.2% last month, from 11.1% in June, as the U.S. added nearly 1.8 million jobs. That total was better than economists' estimates, though far lower than the 4.8 million jobs tacked on in June.

But investors didn't reap many gains in blue-chip stocks. While the small-cap Russell 2000 soared 1.6% to 1,569, the Dow Jones Industrial Average finished the day with a modest 0.2% improvement, and the S&P 500 inched ahead by a mere 2 points to 3,351.

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The Nasdaq Composite fared much worse, declining by 0.9% to 11,010 as hot-running components such as Apple (AAPL (opens in new tab), -2.3%), Microsoft (MSFT (opens in new tab), -1.8%) and Amazon.com (AMZN (opens in new tab), -1.8%) stalled out Friday.

"While the U.S. economy added more jobs and the unemployment rate fell (both better than expectations), the July increase in non-farm payrolls confirms that the rise in new virus cases did slow the economic recovery to some extent," writes Gene Goldman, chief investment officer at Cetera Investment Management, a broker-dealer network encompassing more than 8,000 advisors and $250 billion in assets.

"One worry about today's report is that it puts less pressure on Washington to pass a much-needed, new fiscal stimulus package."

And, indeed, Congress appears to be at an impasse, with Republicans standing by their $1 trillion plan, and Democrats refusing to approve anything less than $2 trillion.

The Bright Side to Friday's Action

But some of the market's more troubled sectors of 2020 made a decent showing. Industrial stocks, for instance, finished with solid gains as UPS (UPS (opens in new tab), +7.9%) continued its torrid run. Income-friendly real estate investment trusts (REITs) and utility stocks also picked up some slack.

Sitting somewhere in the middle, as it has throughout a good-but-not-great 2020, was the health care sector. While COVID-19 has hurt certain areas of health care as patients have put off general care and non-emergency procedures, it has sparked others – such as the biotech industry.

And on Friday, Biogen (BIIB (opens in new tab)) showed that there's plenty of gains to be made outside of coronavirus cures, shooting 10.1% higher on Friday on the back of positive news for its Alzheimer's treatment.

"This morning, (Biogen)/Eisai announced that the FDA accepted the biologics license application (BLA) and granted priority review for aducanumab (Alzheimer's disease)," writes Canaccord Genuity analyst Sumant Kulkarni. "We like the fact that BIIB earned this priority review vs. forcing one by utilizing a voucher that BIIB previously had. As we had (previously) surmised, we believe investors will view this "clean" grant of priority review as a potential indicator of FDA's receptivity towards the ... BLA."

Investors seeking growth often eyeball biotech stocks, which can generate sizzling swings on a single data release, but that's a double-edged sword that tends to cut deep.

The risk-averse can still tap into the profits created by biotechnological innovation through funds. Yes, these funds aren't going to double overnight like a few of their holdings might, but, by spreading their assets out across a few dozen stocks, they tamp down on risk and volatility while still providing exposure to outsize growth. Read on to learn more about the top biotech ETFs to buy.

Kyle Woodley
Senior Investing Editor, Kiplinger.com

Kyle is senior investing editor for Kiplinger.com. As a writer and columnist, he also specializes in exchange-traded funds. He joined Kiplinger in September 2017 after spending six years at InvestorPlace.com, where he managed the editorial staff. His work has appeared in several outlets, including U.S. News & World Report and MSN Money, he has appeared as a guest on Fox Business Network and Money Radio, and he has been quoted in MarketWatch, Vice and Univision, among other outlets. He is a proud graduate of The Ohio State University, where he earned a BA in journalism.