S&P 500 futures jobs nearly hold record as data lands

U.S. stock futures hit all-time highs on Friday as investors weighed the June jobs report, which plays into calculations of a Federal Reserve rate cut.

S&P 500 (ES=F) futures were little changed early in the report after hitting a record high in a short session on Wednesday. Dow Jones Industrial Average futures (YM=F) and tech-heavy Nasdaq 100 (NQ=F) contracts also moved above the flatline. All three gauges were closed Thursday for the Fourth of July holiday.

The U.S. economy added 206,000 jobs in June, more than Wall Street had expected by 190,000. But the unemployment rate unexpectedly rose to 4.1%, the highest level since November 2021, another sign the jobs market continues to cool.

Signs of looser conditions in labor data earlier this week reinforced the idea that inflation will cool, setting the stage for the central bank to cut interest rates from their current two-decade highs. Traders are now pricing in a nearly 75% chance of a cut in September CME’s FedWatch tool.

Investors were puzzled by Friday’s jobs data to decide whether the slowdown in monthly job growth reflects a normalization in the labor market, shaking off the pandemic, or early signs of a broader economic slowdown.

Elsewhere, Labour’s landslide victory in the UK elections caught the attention of investors, especially as the US presidential election approaches, monitoring political risk. With some major donors urging President Joe Biden to step aside, polls are taking aim at Donald Trump’s growing lead and what that means for markets.

The AI boom sent Samsung Electronics’ ( 005930.KS ) quarterly profit up 15 times from a year ago, pushing the stock to a three-year high.

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

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Friday, July 5, 2024 1:59 PM GMT+1

The pressure on the central bank to act increases

There’s no doubt what the story will be coming out of Friday’s jobs report — the risk of the Federal Reserve ending up behind the curve.

As many believe it was too slow to raise interest rates in 2022, the Fed may cut rates too late.

With the jobless rate currently at its highest level since November 2021, other data such as a persistent increase in jobless claims and a drop in job openings are starting to look like sending a clear signal that the headline job gains have overstated its strength. Labor market.

Inflation data continued to slowly move towards the central bank’s 2% target, although that progress stalled in the first few months of the year.

A key feature of this policy regime is the Powell Fed’s sensitivity to inflation data ahead of its target after a 40-year rise in inflation, which we see in 2022. But the labor market is starting to speak loud and clear: things are challenging for more workers.

Neil Dutta at Renaissance Macro, who has become a leading voice on Wall Street saying the Fed should be more bullish on these rate cuts, wrote in a note minutes after Friday’s report was dropped, “Today’s employment report should confirm expectations. September’s rate cut shows economic conditions are cooling, and This differentiates the central bank’s business

In Dutta’s view, the central bank’s July meeting should set the schedule for a September cut.
Friday, July 5, 2024 at 1:54 PM GMT+1

Job gains are slowing, but the unemployment rate is set to hit its highest level since 2021

The U.S. labor market added more jobs than expected in June, while the unemployment rate rose unexpectedly, with the job market continuing to cool after November 2021.

Data from Bureau of Labor Statistics A U.S. economic report released Friday 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 previous month and the highest reading in nearly three years. June’s job additions saw a slight decline from May, which slowed Friday’s job gains to 218,000 from 272,000.

Stock futures rose following the report, adding to gains after the market traded earlier this week amid softer-than-expected economic data, including gauges of inflation that suggested the U.S. was moving back toward an “inflationary path.” According to Federal Reserve Chairman Jerome Powell.