Dow and S&P 500 struggle as investors weigh mixed payrolls data
S&P also peaked closing at nearly 5,767
The Dow Jones Industrial Average and the S&P 500 were indecisive, whereas investors in the Nasdaq digested mixed payrolls data for clues into possible policy adjustments by the Federal Reserve. In contrast, the Nasdaq is lifted by the gains of big technology stocks.
Futures were off to a higher start right after the US Labour Department released its highly anticipated employment report, which showed that the unemployment rate climbed to 4.1 per cent in June from the expected holding at 4 per cent. The employment report also showed that non-farm payrolls rose by 206,000 in June, topping the expected 190,000 gain. May's payrolls were revised down drastically to 218,000 from the previously reported 272,000.
The average hourly earnings came in line, growing 0.3 per cent in June from the previous month, a deceleration from May's 0.4 per cent gain. Emily Bowersock Hill, chief executive of Bowersock Capital Partners, called the report "relatively benign", noting the job gains were better than anticipated, but the data was less concerning than the figures released in May. If you're the Fed, you're saying—what happened in May is not quite as hot as we thought. The data isn't bad enough to alarm markets and not bad enough to worry the Fed," she said.
The Treasury yields dropped after the data release and helped to lift rate-sensitive mega-cap stocks, including Apple, Amazon, and Meta Platforms, all rising between 0.7 per cent and 2.2 per cent. Alphabet rose 1.6 per cent to an all-time high. Utilities and consumer discretionary stocks were among the top sectoral gainers, while energy dropped.
The probability of a 25-basis point rate cut in September rose to roughly 75 per cent following the payrolls data, according to LSEG. Traders kept their bets for about two rate cuts this year.
Tesla's shares, which had reached their highest since early January on Wednesday, turned down from early gains and dropped 0.6 per cent. Other economic data this week pointed to a slowing US economy, leading market watchers to boost bets on multiple rate cuts in 2019. The S&P 500 and the Nasdaq both notched record closing highs during Wednesday's abbreviated session. Light overall trading volume persisted throughout the week as the US market closed Thursday for US Independence Day.
At 9:50 a.m. ET, the Dow Jones had shed 33.29 points to 39,274.71, or 0.08 per cent. The S&P 500 added 0.80 points, or 0.01 per cent, to 5 537.82, and the Nasdaq Composite surged 41.80 points, or 0.23 per cent, to 18,230.10. All three major Wall Street indexes were on pace for weekly gains. Of course, with second-quarter earnings due to start in the coming weeks, it is unsettled whether the Wall Street rally will carry on beyond its handful of giant mega-cap stocks and whether their earnings reflect the justification for their high valuation.
Macy's shares meanwhile rocketed by 10 per cent after a report that Arkhouse Management and Brigade Capital increased their bid for buying out the department store chain group for about $6.9 billion.
Declining issues outnumbered advancers by a 1.55-to-1 ratio on the NYSE and a 1.51-to-1 ratio on the Nasdaq. The S&P index recorded 12 new 52-week highs and six new lows, while the Nasdaq noted 18 new highs and 54 new lows.
(With inputs from Reuters)