Stock market today: Dow hits record high ahead of key jobs report

U.S. stocks had a mixed performance on Friday, with the Dow hitting a record high, while the S&P 500 and Nasdaq dipped slightly. Despite this, all three major indices marked a three-week winning streak, buoyed by optimism about a resilient economy and easing inflation. Investors are now looking ahead to important jobs data next week, particularly the September jobs report set for release on Friday morning.

Dow hits record high

The blue-chip Dow Jones Index reached a new record high on Friday, as investors responded positively to a favorable inflation report that also supported small-cap stocks likely to benefit from lower interest rates. This upbeat sentiment reflected growing confidence in the economy’s resilience, particularly amid signs of cooling inflation.

By the close of trading, the Dow finished at a record 42,313, gaining 137.89 points, or 0.3%. Earlier in the day, it had surged over 450 points to an all-time high of 42,628.32, showcasing robust demand for blue-chip stocks. The positive momentum was driven by sectors expected to thrive in a lower interest rate environment, further boosting investor sentiment.

In contrast, Wall Street's benchmark S&P 500 dipped 0.1%, while the Nasdaq fell 0.4%, with Nvidia contributing to the decline by losing 2.2%. The mixed performance of the broader indices suggests some caution among investors, highlighting the ongoing balancing act between optimism over economic recovery and concerns about interest rate policy. As markets continue to react to economic data, investors will be closely monitoring upcoming reports for further insights into inflation and employment trends.

The PCE Index rose by 2.2%

On Friday, investors received further confirmation of cooling inflation with the release of the PCE index, the Federal Reserve's preferred inflation measure. The personal consumption expenditures price index increased by 0.1% in August compared to July, matching economists' expectations. Year-over-year, the PCE Index rose by 2.2%, slightly below the anticipated 2.3% increase.

"The Fed feels as though it has won the battle on inflation and its primary focus is making sure the job market stays steady," Bellwether Wealth chief investment officer Clark Bellin said.

The Commerce Department reported a moderate rise in consumer spending while inflation pressures continued to ease. Separately, the University of Michigan’s final September reading on consumer sentiment came in at 70.1, surpassing economists’ expectations of 69.3, according to a Reuters poll.

The Job Openings and Labor Turnover Survey

With the inflation battle potentially over, the main focus for investors and the Fed has turned to the jobs market. That's why next week is so important. On Tuesday, investors will get the Job Openings and Labor Turnover Survey, followed by the ADP Employment report on Wednesday and initial jobless claims on Thursday.

But the main event is next Friday, when the September jobs report is released. Economists estimate expect about 145,000 jobs will be added to the economy in September.

According to Interactive Brokers senior economist José Torres, the jobs report could have a big impact on the broader market.

"A sizable miss could undoubtedly lead to a narrative shift in markets of an upcoming downturn, but a sharp gain could push rate reductions further out on the curve. The ideal scenario for bullish investors is a figure close to projections, as it won't disturb current monetary policy easing expectations," Torres said on Friday.

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