Summary

Apple helped the major Wall Street indexes on Friday. As a result, the Dow Jones Industrial Average and the S&P 500 indexes chalked up their eighth consecutive week of gains, while the Nasdaq posted its sixth straight up week.

Apple rose 2.6 percent as consumer demand for Apple’s latest iPhones continued unabated. In addition, Apple posted a better-than-expected sales forecast for the holiday shopping season.

The Labor Department reported that job growth accelerated in October after hurricane-related disruptions in the prior month. Yet, at the same time wages grew at their slowest annual pace in more than 1-1/2 years in a sign that inflation probably will remain under the Federal Reserve’s 2-percent target in the near term.

Apple was easily the largest individual support for the three indexes. The shares also helped raise the tech sector index, which rose 0.9 percent and led all major S&P 500 groups.

All three indexes rose in a week that saw a series of significant events, including the nomination of a new Fed chair and the long-awaited unveiling of a tax-cut bill.

Qualcomm rose 12.7 percent after reports that Broadcom is exploring making an unsolicited offer for the company. Broadcom rose 5.4 percent.

Aetna rose 2.7 percent after Reuters reported CVS Health and Aetna are working toward finalizing merger terms and announcing a deal as early as December. CVS shares ended the trading day down 0.2 percent.

Third-quarter earnings reports also have continued at a heavy pace. With more than 400 of S&P 500 companies having reported, earnings for the quarter are projected to have increased 8 percent, as compared to an expectation of a 5.9 percent at the start of October, according to Thomson Reuters I/B/E/S.

American International Group sank 4.6 percent as investors reacted to a surprise $836 million increase to the insurance giant’s reserves. Starbucks rose 2.1 percent following the release of its results.

Approximately 6.7 billion shares changed hands on the major domestic equity exchanges, a number that was above the 6.3 billion share daily average over the past 20 sessions.

Job Growth Continues

Job growth accelerated in October after hurricane-related disruptions in the prior month, yet at the same time wages increased at their slowest annual pace in more than 1-1/2 years. As a result, inflation is likely to remain benign.

The Labor Department indicated on Friday morning that nonfarm payrolls increased by 261,000 last month as 106,000 leisure and hospitality workers returned to work. That was the largest gain since July 2016. Data for September was revised to show a gain of 18,000 jobs instead of a decline of 33,000 as previously reported.

Average hourly earnings slipped one cent in October, leaving them unchanged in percentage terms, in part due to the return of the lower-paid leisure and hospitality workers. Wages increased 0.5 percent in September. They were up 2.4 percent on a year-over-year basis last month, the smallest gain since February 2016, after a 2.8 percent advance in the prior month.

October’s job growth acceleration reinforced the Federal Reserve’s assessment on Wednesday that “the labor market has continued to strengthen,” and the sluggish wage data did little to change expectations it will raise interest rates in December.

Tepid wage growth supports the view that inflation will continue to undershoot the Fed’s 2 percent target. If wage growth remains lethargic, it will be difficult for Fed to increase interest rates three times next year as they currently anticipate doing.

Although the unemployment rate fell to near a 17-year low of 4.1 percent in October, from 4.2 percent in the prior month, it was primarily due to the labor force decreasing by 765,000 after a surprise rise of 575,000 in September.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell four-tenths of a percentage point to 62.7 percent.

The sharp moderation in job growth in September was blamed on Hurricanes Harvey and Irma, which devastated parts of Texas and Florida in late August and early September and left workers, mostly in lower-paying industries such as leisure and hospitality, temporarily unemployed.

It is likely that wage growth will accelerate with the labor market near full employment. The unemployment rate, which has declined by 0.7 percentage point since January, is now at its lowest level since December 2000 and below the Fed’s median forecast for 2017.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, dropped to 7.9 percent last month. That was the lowest level since December 2006 and was down from 8.3 percent in September.

The lack of wage growth despite a rapidly tightening labor could raise concerns about consumer spending, which appears to have been largely supported by savings this year.

A separate report from the Commerce Department on Friday showed the trade deficit increasing 1.7 percent to $43.5 billion in September as rising exports were offset by a surge in imports.

Other economic reports indicated an increase in business spending on capital in September and a measure of services sector activity moving to more than a 12-year high during October.

Monthly job growth has averaged 162,000 jobs over the past three months, below the average of 187,000 jobs in 2016. The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

The slowing job growth trend largely reflects employers’ difficulties in finding qualified workers.

Private payrolls surged by 219,000 jobs in October after falling by 3,000 in September. Manufacturing employment increased by 24,000 jobs last month while the retail sector lost 8,300 jobs.

Construction payrolls were up 11,000 in October, likely boosted by hiring related to the clean-up and rebuilding efforts in the wake of the hurricanes. Professional and business services payrolls rose as did healthcare employment.

Factory Orders Rise During September

According to a report by the Commerce Department released Friday morning, factory orders increased 1.4 percent during September, as demand for a range of goods rose, Orders increased by an unrevised 1.2 percent in August.

Orders for non-defense capital goods excluding aircraft -seen as a measure of business spending plans – rose 1.7 percent in September instead of the 1.3 percent increase reported last month. September’s increase in these so-called core capital goods orders was the largest since July 2016.

Orders for core capital goods rose 1.4 percent in August. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, increased 0.9 percent instead of the previously reported 0.7 percent rise.

The Commerce Department said it was unable to isolate the impact of Hurricanes Harvey and Irma on the data as the survey is “designed to estimate the month-to-month change in manufacturing activity at the national level and not at specific geographic areas.”

Strong business spending on equipment is helping to underpin manufacturing, which makes up about 12 percent of the economy. Manufacturing is also being buoyed by a weakening dollar, replenishing of business inventories and strengthening global demand. Business investment in equipment has contributed to GDP growth for four straight quarters.

Spending is rising despite signs of slowing oil and gas drilling as ample supplies curb crude oil price increases.

During September, orders for machinery gained 0.1 percent after being unchanged in August. Mining, oil field and gas field machinery orders rebounded 17.8 percent after tumbling 7.5 percent in August.

Orders for transportation equipment rose 4.7 percent, reflecting a 30.8 percent jump in civilian aircraft orders. Motor vehicle orders edged up 0.1 percent after accelerating 2.5 percent in August.