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Stock Market News for June 05, 2017

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Gains in technology shares helped all major indexes to close at record highs for a second consecutive session on Friday.Technology shares gained following expectations regarding changes to the US tax code and release of impressive fiscal second-quarter earnings results from Broadcom. Meanwhile, broader markets pared some gains due to release of weaker-than-expected May jobs report.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) advanced 0.3% to a record close at 21,206.29, retreating from a record intraday high of 21,225.04. The S&P 500 rose 0.4% to a record close at 2,439.07, after hitting an intraday record of 2,440.23. The tech-laden Nasdaq Composite Index gained 0.9% to a record finish at 6,305.80. A total of around 6.4 billion shares were traded on Friday, lower than the last 20-session average of 6.7 billion shares. Advancers outnumbered declining stocks on the NYSE by a 1.34 to 1 ratio. 

Technology Shares Gain

Technology stocks moved north on Friday following anticipations regarding changes to the US tax code. President Trump’s corporate tax repatriation plans will enable companies that hold a lot of cash overseas to repatriate these funds to the US at a lower rate.

These tech companies could repatriate these reserves and use it for investments, dividends and buybacks. Also, domestic companies are speculated to hold more than $2 trillion profits overseas. Last month Trump administration released a short tax-reform plan which included provisions for "one-time tax on trillions of dollars held overseas."

Additionally, Broadcom Ltd (AVGO - Free Report) reported better than expected earnings results in fiscal second-quarter. Shares of Broadcom advanced 8.5%, hitting an all-time high of $253.76.  Earnings came at $3.31 per share in the reported quarter, beating the Zacks Consensus Estimate by $0.29. The company reported revenues of $4.201 billion, which beat the Zacks Consensus Estimate of $4.105 billion.

Strong performance from Broadcom also had a positive impact on investor confidence, which ultimately had a positive impact on the broader markets.The broader Technology Select Sector SPDR (XLK) advanced 0.9%, and emerged as the best performing sector of S&P 500. Some of the key holdings of the technology sector in the S&P 500 including Microsoft (MSFT - Free Report)  and Apple Inc. (AAPL - Free Report)  gained 2.4% and 1.5% respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Nonfarm Payroll Data

Investors digested the report released by U.S. Bureau of Labor Statistics on Friday which showed an increase of 138,000 jobs in May, much lower than the consensus estimate of 184,000. The job gains were attributable to increase in jobs in health care and mining.  Professional and business services led the way by adding 38,000 jobs whereas food services and drinking places added 30,000 jobs. There was an increase of 24,000 jobs in health care sector, whereas mining added another 7,000 jobs, with most of the gain coming from support activities for mining. However, employment in other major industries such as construction, manufacturing, wholesale trade, retail trade, information, financial activities and government, experienced little change.

Meanwhile, unemployment rate declined marginally from 4.4% to 4.3% in May, marking its lowest level in sixteen years. The number of unemployed persons declined to 6.9 million. Since January, the unemployment rate has experienced a decrease of 0.5%. The "U-6" is considered to be a broader measure of the unemployment as it includes those workers who are working part-time for purely economic reasons. U6 unemployment declined to 8.4%, marking its lowest level since mid-2007.

Payrolls data also showed that the average hourly wages increased 0.2% to $26.22. Hourly pay rose 2.5% over the last twelve months. Additionally, the labor force participation rate for May declined 0.2% to 62.7%. 

Despite the weaker than expected jobs report, expectations for a rate hike in June didn’t fall. As per the CME FedWatch tool, the probability of a rate hike at the Fed's June 13-14 meeting held steady at more than 90%.

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Herbalife Exceeds FTC Threshold, Updates Guidance

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Delta Air Lines May Traffic, PRASM Increase, Stock Up

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