The U.S. stock market saw minimal movement on Friday as the S&P 500 index struggled to avoid a third consecutive decline after the release of the Department of Labor’s June nonfarm payrolls report. The report indicated a slowdown in job creation last month, while wage growth remained strong.
Here’s a summary of the market activity:
- The Dow Jones Industrial Average declined by 47 points, or 0.1%, to reach 33,875.
- The S&P 500 experienced a marginal decrease, resting at 4,411.
- The Nasdaq Composite gained 19 points, or 0.1%, reaching 13,697.
On Thursday, the Dow Jones Industrial Average fell by 366 points (1.07%) to 33,922, the S&P 500 declined by 35 points (0.79%) to 4,412, and the Nasdaq Composite dropped by 113 points (0.82%) to 13,679.
The mixed performance of U.S. stocks on Friday was a result of the June nonfarm payrolls report, which revealed the creation of 209,000 new jobs. This marked the smallest increase in over two and a half years. While the report indicated a potential cooling of the labor market due to the Federal Reserve’s interest-rate hikes, other details suggested that the Fed would still face pressure to continue raising rates.
The report’s significance was heightened by the fact that it fell short of economists’ expectations for the first time in over a year, as highlighted by an analysis from Bespoke Investment Group. They noted that the run of better-than-expected nonfarm payrolls reports had come to an end at 14.
The data presented a contrasting view of the U.S. labor market compared to the ADP’s private payrolls growth report, which was released on Thursday. The ADP report suggested that the private sector had created nearly 500,000 jobs in June.
Market analysts observed that the market’s reaction to the nonfarm payrolls report did not significantly alter expectations for a Fed rate hike in July. According to the CME’s FedWatch tool, the likelihood of a hike remained at over 90%.
Investors are now looking ahead to the release of the June consumer price index and upcoming earnings reports before the Fed’s meeting later this month.
Analysts also paid attention to the increase in average hourly wages, which grew by 0.4% in June, surpassing economists’ expectations. This indicates that wage growth, a crucial factor for inflation, remains strong and potentially exceeds the Fed’s preferences.
In the bond market, the yield on the 2-year Treasury dropped below 5% and declined by four basis points to 4.969%. The yield on the 10-year Treasury note remained relatively stable at 4.044%.
Although U.S. stocks have experienced a pullback in the second half of/2023, with all major indexes heading for a weekly loss, the S&P 500 remains close to a 14-month closing high achieved earlier in the week. The index has recorded a nearly 15% increase since the beginning of the year, as per FactSet data.
