Stocks finished mixed Friday, while the dollar test fresh new highs against its global peers and Treasury bond yields continued to flash recession warnings, as investors pulled back from a four-day rally on Wall Street ahead of key jobs data later in the session.
The June jobs report, in fact, showed a much larger-than-expected gain of 372,000, more than 100,000 ahead of the Street consensus forecast, with year-on-year wage growth slowing to 5.1%. The headline unemployment rate was unchanged at a post-pandemic low of 3.6%.
Jobs growth remains a key focus for the Fed's assessment of the heath of the broader economy, and while the pace of hiring has slowed since the beginning of the year, it is still solid enough to keep things ticking over.
Jolts data earlier this week showed that around 11 million position remain unfilled, suggesting hiring will need to accelerate in order to reach full employment, but that will largely depend on the rate of broader economic expansion over the coming months.
"There has been a lot of doom and gloom recently, so a strong labor market read may assuage some fear of a recession and shows the resilient nature of our economy with a robust labor market in the face of hot inflation," said Mike Loewengart managing director for investment strategy at E*TRADE from Morgan Stanley.
"The Fed is committed to raising rates aggressively to cool it, which will likely result in continued volatility," he added. "Keep in mind, the market has had a bit of a rally this week, so coupled with the better-than-expected jobs report, stocks could take a breather."
The S&P 500 is up 3.1% so far this month amid bets that the coming earnings season, set to kick-off next week, may prove to be more resilient than analysts' expect and that Federal Reserve officials will be able to thread the needle between taming inflation with rate hikes while keeping the economy from tipping into recession.
St. Louis Fed President James Bullard said on July 7 that labor market data suggests the economy is still growing, while Fed Governor Christopher Waller told the National Association for Business Economics that while he favored rate hikes in July and again in September, we suggested their pace and size could slow over the final months of the year.
Much will depend, of course, on the pace of jobs growth and the ability of companies to navigate their myriad inflation challenges while passing on cost increases to customers in order to maintain profit margins.
Collective S&P 500 earnings are forecast to rise by 5.6% from last year over the second quarter, to a share-weighted $440.2 billion, with energy and industrials pacing the anticipated gains.
Jobs growth remains a key focus for the Fed's assessment of the heath of the broader economy, and while the pace of hiring has slowed since the beginning of the year, it is still solid enough to keep things ticking over.
Jolts data earlier this week showed that around 11 million position remain unfilled, suggesting hiring will need to accelerate in order to reach full employment, but that will largely depend on the rate of broader economic expansion over the coming months.
Following the payroll data, Europe's Stoxx 600 was marked 0.46% higher in early afternoon trading in Frankfurt, following on from a 0.42% gain for the Asia-region MSCI ex-Japan index and a 0.1% bump for the Nikkei 225 in Tokyo, which was muted by news of the assassination of former Prime Minister Shinzo Abe during a campaign event.
Abe, 67, was delivering a speech in Nara ahead of Parliamentary elections slated for this Sunday that were expected to consolidate the power of ruling Prime Minister Fumio Kishida, when he was shot twice by a 41-year-old suspect who was quickly detained by police, Japanese media reported.
The former two-term Prime Minister was rushed to a local hospital, but died during emergency surgery around five hours later, officials confirmed, marking only the second assassination of a sitting or former leader in nearly 100 years.
In the U.S., bond markets continue to flash recession warnings, with 2-year Treasury note yields trading at 3.107% and 10-years notes trading at 3.09% following a hawkish read of the jobs data. The dollar index, which tracks the greenback against a basket of its global peers, was marked 0.17% lower at 106.95.
On Wall Street, the S&P 500 lost 0.08%, while the Dow Jones Industrial Average ended down 46 points, or 0.15%, to 31,338. The tech-focused Nasdaq rose for the fifth straight day, gaining 0.12%.
Stocks on the move include Twitter (TWTR), which slumped 4.9% following a report from the Washington Post that suggested Elon Musk's $44 billion takeover bid for the group is in "serious jeopardy".
GameStop (GME) shares fell 5% after the video game retailer fired its CFO, Michael Recupero, amid reports of wider staffing cuts less than twenty-four hours after it unveiled a four-for-one stock split.
Levi Strauss & Co. (LEVI) shares, meanwhile, rose 1.1% after iconic clothing maker posted stronger-than-expected second quarter earnings, confirmed its full-year profit forecasts and boosted its dividend.
