U.S. Stocks Slip at End of Big Week

By Anna Isaac and Gunjan Banerji

U.S. stocks wavered Friday as the latest employment report showed the economy added more jobs than expected last month, though uncertainty surrounding fresh government stimulus threatened to crimp a recovery.

Employers added 1.8 million jobs in July and the unemployment rate fell to 10.2%, according to the Labor Department. Economists surveyed by The Wall Street Journal had projected that payrolls grew by 1.5 million and that the unemployment rate dropped to 10.6% from 11.1% in June.

Investors have also been closely monitoring negotiations among lawmakers regarding fresh government stimulus, after $600 in enhanced weekly unemployment benefits expired, endangering consumer spending and an economic recovery.

So far, talks between White House officials and Democratic leaders on a new coronavirus-aid package ended late Thursday without a breakthrough as both sides edged closer to the Trump administration's Friday deadline for reaching a deal or leaving the bargaining table.

Fiscal stimulus has been a key driver in the stock market's dramatic recovery since its March lows, and worries that lawmakers wouldn't reach a consensus weighed on markets early Friday, analysts said.

The S&P 500 fell about 0.1% shortly after the opening bell. The Dow Jones Industrial Average lost about 80 points, or 0.3%. The Nasdaq Composite shed 0.1%.

Despite Friday's losses, all three major indexes are on track to end the week up at least 2%.

July's job growth followed May and June's combined payroll gain of 7.5 million as many states lifted lockdown restrictions on businesses. There are now about 13 million fewer jobs than in February, the month before the coronavirus hit the U.S. economy.

"It shows we're going in the right direction but we're still nowhere close to where we were in February," said Shawn Cruz, senior markets strategist at TD Ameritrade, of the monthly jobs report.

Also hanging in the backdrop are tensions between the U.S. and China. President Trump signed executive orders Thursday night that would bar people in the U.S. or subject to U.S. jurisdiction from transactions with the China-based owners of WeChat and TikTok, effective 45 days from Thursday. That essentially imposes a 45-day deadline for an American company to purchase TikTok's U.S. operations. The orders are likely to be viewed in China as an attempt to stifle the nation's technology sector.

The orders come as relations deteriorate between the two countries, prompting speculation that trade among the world's two largest economies could take a hit.

"China is just about the only bipartisan issue in Washington at the moment," said James Athey, senior investment manager at Aberdeen Standard Investments. "The framework of a Cold War, decoupling and a bi-polar world is the right one to think about. It won't be possible to straddle both China's and the U.S.'s agenda."

Shares of Tencent Holdings plunged as much as 10% on Friday in Hong Kong, hours after Mr. Trump signed the order targeting its WeChat app. Analysts who follow Tencent were scrambling to figure out how much of the company's business could be affected.

In another sign of the deepening rift, Chinese companies with shares traded on U.S. stock exchanges would be forced to give up their listings unless they comply with U.S. audit requirements under a plan recommended Thursday by the Trump administration.

In Asia, major markets fell. The Shanghai Composite dropped almost 1%, while Hong Kong's Hang Seng Index fell nearly 1.6% and Japan's Nikkei 225 index dropped 0.4%.

Shares of Uber Technologies fell 4.5% after the company posted another big loss after market close Thursday, with little sign of recovery in its core ride-hailing business as the pandemic drags on.

Overseas, the Turkish lira rose 0.7% against the dollar after hitting its weakest ever closing level Thursday. Officials from the central bank and the Turkish banking watchdog held an hourslong meeting with top executives from the country's main banks late Thursday evening to discuss recent market developments.

"The situation in Turkey is getting worse and may feed negative spillovers," Mr. Hardman said. "There's potential there that could push the dollar higher against the euro. The euro's more exposed to a negative shock in Turkey, as we saw in 2018."

The yield on the benchmark 10-year U.S. Treasury note ticked down to 0.526%, from 0.535% Thursday. Yields fall as bond prices rise.

Write to Anna Isaac at [e-mail] and Gunjan Banerji at [e-mail]