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Stock market today: S&P 500 futures hold near record as jobs data lands

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3 months ago

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Stock market today: S&P 500 futures hold near record as jobs data lands

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

S&P 500 (ES=F) futures were little changed on the heels of the report, after notching a record close in a shortened session on Wednesday. Dow Jones Industrial Average futures (YM=F) and contracts on the tech-heavy Nasdaq 100 (NQ=F) 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 sign the jobs market continues to cool.

Signs of looser conditions in labor data earlier this week bolstered the idea that inflation will keep cooling, setting the stage for the Fed to lower interest rates from their current two-decade high. Traders are now pricing in a nearly 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.

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

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

Live2 updates

  • 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 continues to slow towards the Fed’s 2% target, though in the first few months of the year that progress appeared to stall.

    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, who has become the leading voice on Wall Street saying the Fed needs to be more forceful this fall in cutting rates, wrote in a note just minutes after Friday’s report dropped that, “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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