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Today’s stock market: Wall Street ends mixed amid moderate jobs report

by Sophia Chen
9 comments
U.S. Jobs Report

Wall Street ended mixed on Friday as the latest employment data pointed to a steady U.S. job market capable of bolstering the economy without significantly inflating prices.

The S&P 500 fell by 12.64 points or 0.3%, settling at 4,398.95, even though the majority of stocks within the index appreciated. The Dow Jones Industrial Average lost 187.38 points, or 0.6%, closing at 33,734.88, and the Nasdaq composite slightly declined by 18.33 points, or 0.1%, ending at 13,660.72.

The economy’s ability to continue to grow amidst the Federal Reserve’s inflation-curbing interest rates is under close scrutiny. The goal is to foster growth without inducing the Fed to apply tighter brakes to prevent runaway inflation.

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The jobs report for June indicated that U.S. employers added 209,000 jobs, less than May’s 306,000 but in line with economic forecasts. This contrasted with Thursday’s report which suggested an unexpected hiring surge, leading to a market decline.

In addition to the hiring slowdown, there were signs of some easing in the job market. For instance, more people are working part-time as their hours have been reduced, according to Brian Jacobsen, chief economist at Annex Wealth Management.

“The job market is in good health, for now, but it’s not on fire,” Jacobsen noted.

This might cause the Federal Reserve to stick to its hinted plan: possibly two more rate hikes this year before freezing the rates to ensure inflation returns to its 2% target. Wall Street widely anticipates a rate hike at the Fed’s meeting in three weeks.

Post-jobs report, the Treasury yields presented a mixed picture. The 10-year Treasury yield increased slightly to 4.05% from 4.03% the previous day. This yield significantly influences mortgages and other critical loans.

The two-year yield, closely linked to Fed’s expectations, dropped to 4.94% from 5.00%.

The report still had underlying signs of potential inflation.

Last month’s wage growth remained stable, contrary to expectations of a slowdown. While a 4.4% increase in average hourly earnings over last year is preferred by workers to the anticipated 4.2%, it could be seen by the Fed as a factor pressuring inflation upwards.

Yields are currently around their highest since March, a time when high rates led to three U.S. banking system failures and impacted confidence in financial markets. High rates have also adversely affected sectors like manufacturing and housing.

On Friday, energy stocks were among the best performers on Wall Street due to the oil price rally. Schlumberger, Halliburton, and Marathon Oil saw gains of 8.6%, 7.8%, and 4.3%, respectively.

Solar company stocks also rose, further helped by First Solar’s announcement of a $1 billion credit facility for expansions, resulting in a 3.3% increase in its shares.

Smaller companies, viewed as more reliant on lower interest rates and more in sync with the U.S. economy, outperformed the broader market. The Russell 2000 index of these smaller stocks gained 1.2%.

However, Levi Strauss saw its stocks fall by 7.7% despite better-than-expected quarterly profits. A revised lower full-year earnings forecast due to pressure on its U.S. wholesale business was the cause. Meanwhile, Costco Wholesale reported a sales growth slowdown in June compared to May, leading to a 2.3% decline in its stocks.

With higher yields pulling it down, the S&P 500 saw a 1.2% loss over the week, marking its second weekly loss in the past eight weeks.

Overseas, Chinese indexes continued their slump as recovery from the lifting of COVID-19 restrictions is slower than anticipated. Hong Kong’s Hang Seng and Shanghai stocks dropped by 0.9% and 0.3%, respectively.

U.S. Treasury Secretary Janet Yellen was in Beijing to address economic tensions between the world’s two largest economies. Along with Chinese Premier Li Qiang, she expressed the desire for improved communication, amidst U.S. government’s restrictions on technology exports to China and other disputes.

In Europe, markets showed a mixed response. Germany’s DAX gained 0.5%, while the FTSE 100 in London declined 0.3%.

——

Contributions made by AP Business Writers Matt Ott and Elaine Kurtenbach.

Frequently Asked Questions (FAQs) about U.S. Jobs Report

How did Wall Street react to the latest jobs report?

Wall Street had a mixed response to the latest jobs report. The S&P 500 fell by 12.64 points, the Dow Jones lost 187.38 points, and the Nasdaq declined by 18.33 points. However, more stocks within the S&P 500 index rose than fell.

What did the jobs report indicate about the U.S. job market?

The jobs report suggested that the U.S. job market is steady, with employers adding 209,000 jobs in June. This indicates a healthy job market that is not too overheated, thereby potentially keeping inflation in check.

What are the Federal Reserve’s projected actions following the jobs report?

Following the jobs report, the Federal Reserve is expected to maintain its indicated course: potentially two more rate hikes this year before maintaining rates at a higher level to ensure inflation returns to its 2% target.

How did the jobs report impact Treasury yields?

The 10-year Treasury yield slightly increased to 4.05% from 4.03%, while the two-year yield, which is more influenced by expectations for the Federal Reserve, fell to 4.94% from 5.00%.

Were there any signs of potential inflation in the jobs report?

Yes, there were signs of potential inflation. For instance, wage growth remained steady last month, instead of slowing as economists expected. This could be seen by the Fed as a factor pressuring inflation upwards.

How did the report impact different sectors in the stock market?

Energy and solar company stocks saw a significant rise following the report, largely due to the oil price rally and an announcement from First Solar. Conversely, Levi Strauss and Costco Wholesale saw a drop in their stocks due to various business challenges. Smaller companies, viewed as more reliant on lower interest rates, outperformed the broader market.

How did overseas stock markets react?

Chinese indexes continued to slump, with the Hang Seng and Shanghai stocks dropping by 0.9% and 0.3%, respectively. In Europe, markets showed a mixed response with Germany’s DAX gaining 0.5%, and the FTSE 100 in London declining by 0.3%.

More about U.S. Jobs Report

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9 comments

MaxProfit July 9, 2023 - 8:50 pm

Mixed finish for the week. Interesting times… wonder how next week will play out.

Reply
MariaFinanceGuru July 9, 2023 - 9:28 pm

steady job growth is def good news. But with these high interest rates, we’ll have to see how long this can last.

Reply
KevinSanders July 9, 2023 - 11:36 pm

didnt expect the job market to stay this solid, especially with those fed rate hikes coming. Hoping for a stable economy tho.

Reply
Jenny_1982 July 10, 2023 - 3:09 am

Finally, some good news for the solar companies! high time they got a boost. Hope it’s not just a flash in the pan.

Reply
StockNerd101 July 10, 2023 - 3:13 am

Yellen in Beijing, huh? About time somebody tried to ease things up with China. Could be good for both economies if things go well.

Reply
Investor_Gal July 10, 2023 - 3:33 am

Fed’s doing their balancing act again. Not too hot, not too cold. Let’s see if they can pull it off!

Reply
WallStreetWolf July 10, 2023 - 10:16 am

wage growth still strong, hmm… Gotta keep an eye on inflation, could get messy.

Reply
LuckyLarry July 10, 2023 - 1:12 pm

Don’t usually invest in small cap stocks, but they seem to be outperforming now. Might be time to rethink my strategy.

Reply
TradingTom July 10, 2023 - 2:44 pm

Levi Strauss stock down 7.7%?? didnt see that one coming. Just shows you never really know with the market.

Reply

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