The S&P 500 holds near record as jobs data lands

US stocks held near all-time highs on Friday as investors weighed the June jobs report, which will play into Federal Reserve rate cut calculations.

The S&P 500 (^GSPC) was little changed on the heels of the report, after notching a record close in a shortened session on Wednesday. The Dow Jones Industrial Average (^DJI) and the tech-heavy Nasdaq Composite (^IXIC) also hovered above the flatline. All three gauges were shuttered on Thursday for the Fourth of July holiday.

The US economy added 206,000 jobs in June, more than the 190,000 expected on Wall Street. But the unemployment rate unexpectedly rose slightly to 4.1%, its highest level since November 2021, in another signal the jobs market continues to cool.

Signs of looser conditions in labor data earlier this week bolstered the idea that inflation will keep easing, setting the stage for the Fed to lower interest rates from their current two-decade high. Traders are now pricing in a 75% chance of a cut in September, according to CME’s FedWatch tool.

Investors are puzzling over Friday’s jobs data to decide whether slowing monthly job growth reflects a normalization in the labor market as it shakes off the pandemic, or marks the early signs of a broader economic slowdown.

Elsewhere, the Labour Party’s landslide win in UK elections attracted attention from investors monitoring political risk, particularly as the US presidential election nears. With some key donors urging President Joe Biden to step aside, eyes are on Donald Trump’s growing lead in the polls and what that could mean for markets.

On the corporate front, Samsung Electronics’ (005930.KS) quarterly profit surged to 15 times the size of a year ago, lifting the stock to a three-year high, boosted by the AI boom.

Crypto-linked stocks Coinbase Global (COIN) and Marathon Digital (MARA) lost around 6% in morning trading as bitcoin (BTC-USD) sank to its lowest against the dollar since February.

Live3 updates

  • Stocks hold steady as unemployment rate ticks up

    US stocks held near all-time highs on Friday as investors parsed how the June jobs report, which showed a slightly higher unemployment rate, will influence the Federal Reserve’s interest rate decision making.

    The S&P 500 (^GSPC) was little changed on the heels of the report. The Dow Jones Industrial Average (^DJI) slipped below the flatline, while the tech-heavy Nasdaq Composite (^IXIC) hovered above it. Friday’s trading session continues the action from Wednesday, as all three gauges were shuttered on Thursday for the Fourth of July holiday.

  • Pressure builds for the Fed to act

    There’s no question what the story to emerge from Friday’s jobs report will be — the Federal Reserve is risking ending up behind the curve.

    Meaning the central bank may end up cutting rates too late, just as many believe it was too slow to raise interest rates back in 2022.

    With the unemployment rate now at its highest level since November 2021, other data — like a rise in continuing jobless claims and a drop in job openings — start to look like they’ve been sending a clear signal that headline job gains have overstated the strength of the labor market.

    Inflation data continue to slow toward the Fed’s 2% target, though that progress appeared to stall in the first few months of the year.

    The Powell Fed’s sensitivity to inflation data running above its target after the 40-year high in price increases we saw back in 2022 has been the predominant feature of this policy regime. But the labor market is starting to speak louder and more clearly: Things are getting challenging for more workers.

    Neil Dutta at Renaissance Macro has become the leading voice on Wall Street saying the Fed needs to be more forceful this fall in cutting rates. In a note just minutes after Friday’s report dropped he said: “Today’s employment report ought to firm up expectations of a September rate cut. Economic conditions are cooling and that makes the trade-offs different for the Fed.”

    In Dutta’s view, the Fed’s July meeting should set the table for a September cut.

  • Job gains beat, but unemployment rate rises to highest since 2021

    The US labor market added more jobs than expected in June while the unemployment rate unexpectedly rose, reaching its highest level since November 2021 in another sign the job market continues to cool.

    Data from the Bureau of Labor Statistics released Friday showed the US economy market added 206,000 nonfarm payroll jobs in June, more than the 190,000 expected by economists.

    The unemployment rate rose to 4.1%, up from 4% in the month prior and the highest reading in almost three years. June’s job additions were a slight decline from May, which saw job gains revised down on Friday to 218,000 from the 272,000 initially reported last month.

    Stock futures turned higher following the report, adding to gains after the market traded to record highs earlier this week amid a slew of softer-than-expected economic data, including readings on inflation that have the US pacing back toward a “disinflationary path,” according to Federal Reserve Chair Jerome Powell.

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