S&P 500 holds near record as jobs numbers come in

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• Friday, July 5, 2024 at 6:33 AM MST

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  Stocks remain flat as unemployment rate rises

  U.S. stocks remained at record highs on Friday as investors wondered how the June jobs report, which showed a slightly higher unemployment rate, would influence the Federal Reserve’s interest rate decision.

  The S&P 500 (^GSPC) was little changed following the report. The Dow Jones Industrial Average (^DJI) fell below the flatline, while the tech-heavy Nasdaq Composite (^IXIC) hovered above. Friday’s trading session continued Wednesday’s action, as all three gauges were closed on Thursday for the July 4 holiday.

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  Friday, July 5, 2024 at 5:59 AM MST

  Pressure is mounting on the Fed to take action

  It’s clear what Friday’s jobs report will bring: The Federal Reserve is at risk of falling behind.

  This means that the central bank may be cutting rates too late, just as many believe the 2022 rate hike was too slow.

  With the unemployment rate at its highest level since November 2021, other data, such as a rise in continuing jobless claims and a decline in job openings, are starting to provide a clear signal that job growth is overstating the strength of the labor market.

  Inflation numbers continue to slow toward the Fed’s 2% target, though that progress appeared to stall in the first few months of the year.

  The Powell Fed’s sensitivity to inflation rates that exceed its target after the 40-year peak in price increases we saw in 2022 is the dominant feature of this policy regime. But the labor market is starting to speak louder and clearer: Things are getting harder for more workers.

  Neil Dutta of Renaissance Macro has become the leading voice on Wall Street saying the Fed needs to be more forceful in cutting rates this fall. In a note issued minutes after Friday’s report was released, he said: “Today’s employment report should confirm expectations of a rate cut in September. Economic conditions are cooling, and that’s changing the tradeoffs for the Fed.”

  According to Dutta, the Fed’s July meeting should provide the impetus for a rate cut in September.

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  Friday, July 5, 2024 at 5:54 AM MST

  Job growth outpaces, but unemployment rate rises to highest level since 2021

  The U.S. labor market added more jobs than expected in June, while the unemployment rate unexpectedly rose to its highest level since November 2021, in another sign that the labor market continues to cool.

  Figures released Friday by the U.S. Bureau of Labor Statistics showed that the U.S. economy added 206,000 nonfarm jobs in June, more than the 190,000 economists had expected.

  The unemployment rate rose to 4.1%, up from 4% the previous month and the highest reading in nearly three years. June’s job gains were a slight decline from May, when job gains were revised up on Friday to 218,000 from the 272,000 initially reported last month.

  Stock futures rose after the report, extending gains after the market hit record highs earlier this week amid a series of weaker-than-expected economic data, including inflation figures that suggest the U.S. is back on a “disinflationary path,” Federal Reserve Chairman Jerome Powell said.