Stock Market Today: Dow Hits Record on Rousing Jobs Report

There were no ifs, ands or buts about it among Wall Street's experts – July's job report was good. But concerns about whether it was so good that it would affect Federal Reserve monetary policy kept a lid on parts of the market Friday.

Nonfarm payrolls jumped by 943,000 in July, topping estimates by 100,000 jobs, and the unemployment rate declined to 5.4% from 5.9% in June. Better still, June's count was revised higher by 88,000 jobs to 938,000.

Fed Chair Jerome Powell has said progress on the employment front is a key measuring stick for the central bank's decision about when to pare its massive monthly asset purchases.

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"Today's payroll numbers were significant since this was the final print before the long-awaited Jackson Hole Symposium," says Anu Gaggar, global investment strategist for Commonwealth Financial Network. "It is widely expected that the Fed will give a more concrete indication of tapering then provided it gets the 'substantial progress' it is looking for."

So, was July's report enough evidence?

"This number was really good, but the best part was it wasn't so strong that the Fed would have to change policy," says Ryan Detrick, chief market strategist for LPL Financial.

However, some, including Rick Rieder, BlackRock's chief investment officer of global fixed income, disagree.

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"The Fed should move forward with its tapering program (especially in mortgages), as we appear to already be very close to maximum employment and, simultaneously, we may be at risk of witnessing an overheating in some areas," he says.

Sectors hinging strongly on the economic recovery, such as financials (+2.1%) and materials (+1.5%), helped lift both the Dow Jones Industrial Average (+0.4% to 35,208) and S&P 500 (+0.2% to 4,436) to new record highs. Relative weakness in consumer discretionary (-0.7%) and technology (-0.1%) sent the Nasdaq Composite 0.4% lower to 14,835.

Other news in the stock market today:

• The small-cap Russell 2000 bested its large-cap counterparts, improving 0.5% to 2,247.
• Zynga (ZNGA) ended the week on a sour note, plummeting 18.2% after earnings. The FarmVille creator reported higher-than-anticipated earnings of 2 cents per share and revenue of $720 million in its second quarter. However, the company's $711.9 million in bookings for the three-month period, as well as its current-quarter outlook, both fell short of analysts' estimates.
• Yelp (YELP, +5.2%) was a rosier post-earnings mover. The online review company posted an unexpected adjusted profit of 5 cents per share in Q2; revenues of $257.2 million also came in above the consensus estimate. Additionally, YELP raised its full-year guidance.
• U.S. crude oil futures gave back 1.2% today to end at $68.28 per barrel. On a weekly basis, black gold shed 7.7%, marking its biggest week-over-week decline since October.
• Gold futures fell 2.5% to settle at $1,763.10 an ounce.
• The CBOE Volatility Index (VIX) declined 6.1% to 16.23.
• Bitcoin prices jumped to their highest levels since May, gaining 5.3% to $42,844.28. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)

The Best Picks for 2021's Second Half

The way forward is hardly dreary, but it certainly doesn't get easier from here.

FactSet Senior Earnings Analyst John Butters' latest Earnings Insight reveals that the S&P 500 is on pace to report its highest quarterly revenue growth since FactSet started tracking the metric in 2008. Between actual sales and those estimated from companies still to report in the second quarter, the S&P 500 is signaling 24.7% revenue growth over Q2 2020 – the depths of the COVID 19 pandemic – which would shatter the 12.7% expansion recorded in Q2 2011.

But more difficult comparisons for the rest of the year will bring down that rate, says Butters: "The estimated revenue growth rate for Q3 2021 is 14.4%, while the estimated revenue growth for Q4 is 11.0%."

This environment is what you must consider when evaluating stocks for the next few months – and what we've kept in mind as we highlighted some of the top opportunities for the remainder of 2021.

We've sliced and diced the market, evaluating growth plays and value picks alike, and exploring sectors from energy to comms. But we cap our second-half lookahead with a wide range of stocks that, for numerous reasons, appear poised to outperform over the next few months.

While several of the best stocks for the rest of 2021 are piggybacking more specific trends, the overarching theme here is much the same as it was to start the year: the American economy finding its feet again.