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JOBS REPORT — What you need to know in markets on Friday

Myles Udland
Markets Reporter

Apple (AAPL) is officially the world’s first trillion-dollar company.

On Thursday, Apple rose 2.9% to close at $207.39 per share, giving it a market capitalization of more than $1 trillion. Thursday marked the second-straight day that Apple rallied, as the stock rose more than 5% on Wednesday following a strong quarterly earnings report after Tuesday’s close.

And while this number is large in absolute terms — $1 trillion is 1 followed by 12 0s — Apple’s valuation is actually quite reasonable. At least by one traditional measure.

“You don’t need a +20x price earnings multiple to get to $1 trillion valuation,” Datatrek Research’s Jessica Rabe said in an email on Thursday.

“It would be logical, but wrong, to think a huge valuation must stem from a sky-high PE ratio. Apple trades for 17.3 times next year’s consensus estimate, even before you exclude cash. That’s barely above the market multiple of 16.7 times.” 

One expects this will not be the last we hear of Apple’s market capitalization.

In this Aug. 13, 1998 file photo, Apple’s new iMAC computer is seen at Apple headquarters in Cupertino, Calif. Apple has become the world’s first company to be valued at $1 trillion, the financial fruit of tasteful technology that has redefined society since two mavericks named Steve started the company 42 years ago. (AP Photo/Ben Margot)

But the main event Friday will be the jobs report, which is expected to show 192,000 jobs were created in July, extending the strong run of readings on the U.S. economy seen over the last couple weeks.

This jobs report will follow last week’s GDP report for the second quarter which showed the economy grew at an annualized pace of 4.1% and a glowing assessment of the economy from the Federal Reserve in its policy statement released Wednesday. Investors will also get the June reading on the trade balance and two updates on service sector activity in July.

And on the earnings side, notable companies reporting results should include Kraft Heinz (KHC), Cboe Global Markets (CBOE), Dish Networks (DISH), and Berkshire Hathaway (BRK-A, BRK-B)

July jobs preview

July is expected to have been another strong month for the U.S. labor market.

According to estimates from Bloomberg, nonfarm payrolls are expected to have increased by 192,000 in July with the unemployment rate forecast to drop to 3.9%. In June, the economy added 213,000 jobs while the unemployment rate rose to 4% on an increase in labor force participation.

Wages are expected to have rise 0.3% over last month in July and 2.7% over the prior year.

“Our payrolls model along with a bottoms-up look at industry trends in employment together point to a solid payrolls print for July,” said Morgan Stanley economist Ellen Zentner in a note Thursday. “We look for net job growth of 199,000 in the July employment report.”

At Goldman Sachs, economist Spencer Hill said July’s report should show 205,000 jobs were added to the economy, above consensus expectations.

Hill notes that surveys from the manufacturing and services sector point to a strong month for hiring, while The Conference Board’s latest consumer confidence report also showed that the labor market differential — or the difference between folks who think jobs are plentiful and those who think work is hard to come by — also pointed to a strong month for hiring.

Uncertainty from tariffs, however, could potentially slow hiring.

A worker unfurls an American flag at the FlagSource facility in Batavia, Illinois, U.S., on Tuesday, June 27, 2017. (Photo: Jim Young/Bloomberg via Getty Images)

This report comes after ADP’s report on private payrolls earlier this week showed 219,000 private sector jobs were created in July. And while this report tends not to have a ton of predictive value when it comes to the government’s official report, but it still fits in with the story most all other data is telling about the U.S. labor market — things are good.

“Most employment surveys are at a high level, while initial jobless claims recently touched their lowest level in almost 50 years,” said Andrew Hunter, U.S. economist at Capital Economics. “With activity booming on the back of the fiscal stimulus, the continued strength of the labor market will keep the pressure on the Fed to continue raising interest rates.”

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland