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NEW YORK — Wall Street climbed back to its best level in 20 months on Friday following a stronger-than-expected report on the U.S. job market.
The S&P 500 rose 0.4%, enough to clinch a sixth straight winning week for the index, which is its longest such streak in four years. Wall Street’s main measure of health is now just 4% below its record set at the start of last year.
The Dow Jones Industrial Average rose 130 points, or 0.4%, and the Nasdaq composite gained 0.4%.
Yields rose more sharply in the bond market following Friday’s jobs report, which said U.S. employers added more jobs last month than economists expected. Workers’ wages also rose more than expected, and the unemployment rate unexpectedly improved.
The yield on the 10-year Treasury rose to 4.22% from 4.15% late Thursday. The yield on the two-year Treasury rose to 4.72% from 4.60%.
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Stocks of some companies whose profits are closely tied to the strength of the economy rallied. Energy-related stocks had the biggest gain of the 11 sectors that make up the S&P 500, rising 1.1% as oil prices strengthened amid hopes for more demand for fuel.
Carrier Global climbed 4.5% after it said it agreed to sell its security business, Global Access Solutions, to Honeywell for $4.95 billion.
Still, Wall Street worries that the resilient job market could end up giving inflation more fuel. That could push the Federal Reserve to either raise its main interest rate further or at least keep it at its highest level since 2001 for longer than expected.
On Tuesday, the U.S. government will give the latest monthly update on how high inflation is for U.S. consumers. The Fed will announce its next move on interest rates Wednesday.
Google’s parent company, Alphabet, slipped 1.4% and was the heaviest weight on the S&P 500. Other Big Tech stocks were stronger, with Nvidia, Apple and Microsoft rising.
The home furnishings company RH slumped 14% after reporting weaker results for the latest quarter than analysts expected.
All told, the S&P 500 rose 18.78 points to 4,604.37. The Dow added 130.49 points to 36,247.87, and the Nasdaq climbed 63.98 points to 14,403.97.
In the oil market, a barrel of benchmark U.S. oil gained $1.89 to settle at $71.23, though it’s still more than $20 below where it was in September. Brent crude, the international standard, rose $1.79 to $75.84 per barrel.
Indexes were mostly higher in Europe and mixed in Asia.
A preliminary report from the University of Michigan on Friday said U.S. consumers’ expectations for inflation in the coming year dropped to 3.1% from 4.5% a month earlier, the lowest since March 2021. It also said sentiment among consumers strengthened enough to erase all declines from the prior four months.
What’s at risk when you take out a small business loan
What’s at risk when you take out a small business loan
If you’re running a small business, you’ll likely need to raise some capital at some point. There are many options for doing so—including borrowing from family or friends, taking out a small business loan from the bank, or relying on your credit cards. But no matter how you scrape together funds, it’s essential to consider how you will pay them back.
Westfield used industry sources and news coverage to compile a list of potential risks in borrowing money to fund a small business. According to a small business report by the Federal Reserve, nearly 3 in 4 firms with paid employees had outstanding debt in 2022. Among businesses with debt, 40% have borrowed $100,000 or more. Companies will have to pay those loans back over time, potentially burdening their business’s revenue.
Those who want to avoid loans or credit card debt may seek investors and offer equity in their business. However, this strategy has its own risks. The more ownership you offer to outside investors, the less control you have over your business strategies.
No matter what type of business funding you decide to pursue, make sure you understand the long-term consequences and risks that come along with it.
Defaulting on a loan
A traditional loan from the bank might seem like the most obvious solution when you’re looking to raise money for your small business. There are a few options here, including a traditional business loan from your banking institution or one backed by the Small Business Administration. SBA loans are typically a bit easier to get approved, as they are backed by the government and pose less risk for lenders.
No matter which loan you take out, defaulting or failing to make payments will have severe consequences. You will lose any collateral you’ve put up, and your business and personal credit scores can take a hit. Most SBA loans require a personal guarantee, meaning your lender can seize your personal assets if you can’t cover the cost.
It’s critical to have a repayment plan before borrowing money and to take only what you need.
Interest increases
An alternative to a small business loan is to pay for business expenses using a personal or business credit card. A credit card can ensure you can pay vendors on time when your cash flow is irregular, as you can pay off your bill later or over time.
That said, credit cards are not a reliable source of significant funds. Most credit cards have very high interest rates that can get out of control if you can’t pay back your debts. The current average business card APR is 22.70%, and because credit card APRs are almost always tied to the prime rate, you could be subject to increases and fluctuations over time.
Not to mention, credit cards don’t come with a set payoff schedule like a loan. You’ll have to be disciplined with monthly payments to avoid burdening yourself with debt for an extended period.
Shifting control
If you’re worried about the implications of borrowing money from a bank or credit card company, you could consider seeking angel or venture capital investing to fund your business. In this case, you’d offer equity in the business in exchange for securing the funds you need to keep it running.
The risk in this method comes if you transfer too much control into the hands of investors. The more equity you trade away, the less control you have over your business. Think carefully about how much sway you are willing to part with and how much you trust the input of the investors you bring on, especially if you offer a majority share.
Relationship fallouts
Finally, borrowing money from friends or family could be an alternative if you either don’t qualify for funding from the bank or worry about paying it back. You could also score a deal on repayment terms and interest with the right lender.
Still, this is very dangerous to personal relationships. A 2022 CreditCards.com survey found that among respondents who lent friends and family money, 59% had a bad experience, including not getting their money back or damaging their relationship. If the relationship is important, consider how borrowing money might change it.
This story originally appeared on Westfield and was produced and distributed in partnership with Stacker Studio.
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