Good news is finally good news. Stocks rallied Friday after the latest employment report showed a second consecutive month of solid jobs gains and a pickup in wages.
The Dow popped more than 150 points. The Nasdaq rose 1% and moved closer to its first new all-time high since July 2015.
Investors cheered the solid jobs numbers — even though it increases the chances of an interest rate hike by the Federal Reserve in September — because it shows the U.S. economy remains on solid footing, despite concerns about Brexit and slowing growth in China.
“There is nothing on the surface of the jobs report that looks weak.” said Patrick Kaser, a large cap portfolio manager at Brandywine Global.
Kaser said the jobs report is particularly good news for banks, which have had to cope with low interest rates hurting their profit margins for years. If the Fed does raise rates again in a few months, bank earnings should benefit.
With that in mind, big bank stocks JPMorgan Chase (JPM), Citigroup (C), Wells Fargo (WFC) and Bank of America (BAC) all rallied on Friday.
“It’s a happy jobs day.” said Andrew Chamberlain, chief economist for recruitment company Glassdoor. “Slow and steady growth is what we’re seeing. It’s good for banks and for the overall market.”
Bond yields rose as well, another sign that investors believe the U.S. economy is improving and that the Fed may raise rates at least once this year.
But that could be bad news for some slow growth companies that investors mostly love for their high dividend yields. Verizon (VZ, Tech30) is a prime example. It was only one of three Dow stocks that was lower on Friday morning.