U.S. markets traded higher across the board on the back of a spectacular employment report, recovering all the losses sustained after the surprise Brexit vote.
In June, 287,000 jobs were created, which was significantly above consensus estimates and the strongest gain since October. As a result, shares rallied amid optimism in the economy, with financial and consumer stocks leading the way.
The S&P 500 traded above record levels intraday, with 497 out of 500 stocks in the green.
"What we are seeing is good job creation and economic data continuing to improve," said Chris Dearborn, managing director of the Market Intelligence Desk at Nasdaq. "Retail sales data has been strong. More jobs means more people will be spending on consumer discretionary items, and that accounts for nearly two-thirds of our GDP. These types of data points are what we need to get this country and economy back on its feet."
Crude oil traded slightly higher, trimming its largest weekly decline in five months, as militants launched a fresh round of attacks on oil pipelines in Nigeria's southern Niger Delta area. Meanwhile, gold saw its first two-day drop since the Brexit referendum.
The unofficial kickoff of earnings season starts July 11 when Alcoa reports after the market close followed by large financials JPMorgan, Citigroup and Wells Fargo. According to S&P Global Market Intelligence, only four of 10 S&P 500 sectors are projected to have positive earnings growth: consumer discretionary, industrials, utilities and health care.
The energy sector is once again expected to post the largest decline in growth, though the decline is an improvement from first-quarter results. Other sectors with large declines in growth are financials, materials and information technology. Excluding the energy sector drag, S&P 500 earnings growth would still decline 0.7 percent in the second quarter.
"The averages are in record-breaking territory and volumes are staying high, which indicates people are staying invested in the market and they are trading," Dearborn explained. "Earnings could be the next catalyst to keep that momentum going."
Key reports are set to be released including Producer Price index (PPI), Industrial Production, Consumer Price Index (CPI) and Retail Sales. The reports are closely monitored by the Federal Reserve and are taken into account when developing monetary policy. Retail sales speaks to the optimism of the consumer, and PPI is a measure of the cost to produce goods and what gets passed down to the consumer. Analysts will see if the strong employment data is translating into increased consumer discretionary spending.
Several Federal Reserve Bank presidents will be on the speaking circuit addressing the state of the economy. Traders will be listening for clues about the timing of a future hike in interest rates.