4:05pm: Wall Street finishes lower
At the close, the Dow was 187 points lower at 33,735, the S&P 500 hit 4,399 points for a 13-point loss and the Nasdaq had shed 18 points to finish at 13,661.
According to some analysts, payroll growth is slowing relentlessly, but that won’t stop the Fed hiking this month, for the last time.
"The slowing in payrolls alone might have given the Fed pause at their meeting later this month, but the overshoot in hourly earnings, and the upward revision to the May print, means that a hike now has to be our base case," Ian Shepherdson of Pantheon Macroeconomics commented. "(It) would take a zero core CPI print now to keep the Fed on hold. For the record, we think this hike will be a mistake."
12:05pm: Stocks on track for losing week on rate hike fears
US stocks were mixed in noon trading after June’s nonfarm payrolls rose by 209,000, fewer than the 240,000 jobs expected by economists.
At midday, the Dow lost 36 points to 33,887, while the S&P 500 added 7 points at 4,419 and the tech-heavy Nasdaq gained 61 points to 13,740.
“The reading gives the Fed some breathing space with regards to future rate hikes,” IG senior market analyst Axel Rudolph said.
“Nonetheless, according to the CME Fed Watch tool, 92% of participants expect to see another 25-basis point rate high at the 26 July monetary meeting,” he added.
Notable movers included shares of Levi Strauss & Co, which fell 7% after the denim apparel retailer cut its earnings outlook for the year.
9:40am: July rate hike expectations remain
US stocks were mixed at the open on Friday as investors weighed up how this week’s economic data, including employment figures from the private sector and today's non-farm payrolls report, could play into the Federal Reserve’s next move.
Just after the opening bell, the Nasdaq had moved 16 points or 0.1% higher at 13,694 points, while the Dow Jones was down 35 points or 0.1% at 33,887 points and the S&P 500 was down 3 points or 0.1% at 4,409 points.
ING chief international economist James Knightley said this jobs report being softer than widely expected had taken some of the steam out of recent market moves, but the labor market remains too tight for the Fed to relax.
“A July rate hike is coming, but labour data is the most lagging of indicators and softer inflation next week could see rate hike expectations for further out moderate a touch,” Knightley said.
BKForex managing partner Kathy Lien also noted that this report would not change the course of the Fed. “The Fed is much more motivated by inflation which remains hot, and we have the CPI report [to come] next week,” she said.
8:35am: Jobs report falls short of expectations
The US economy added 209,000 jobs in June, below the consensus expectation of 225,000 and a significant drop from May’s reading of 339,000, according to the latest non-farm payroll data from the Bureau of Labor Statistics.
Employment continued to trend up in government, healthcare, social assistance, and construction, the bureau said.
The unemployment rate was little changed at 3.6% in June, having ranged from 3.4% to 3.7% since March 2022.
This was in line with expectations and down from 3.7% in May.
Just after the release of the report, futures for the Nasdaq were down 0.2%, and the S&P 500 and the Dow Jones were both down 0.1% in pre-market trading.
7:45: US jobs data in focus
US stocks are expected to open slightly lower on Friday with all eyes on the crucial US jobs report for June amid persistent expectations of further interest rate hikes in the world’s biggest economy.
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) were 0.04% lower, while those for the S&P 500 also lost 0.08% and contracts for the Nasdaq-100 futures shed 0.16%.
ADP data on Thursday came in strong, leading to expectations that the non-farm payrolls will also reflect strength. In May, US non-farm payrolls rose by 339,000. Consensus expectations point to a 225,000 increase in June. The data is due at 8.30am ET.
“So today, the official US jobs data could or could not confirm the strength in the ADP figures, but we are all prepared for another month of strong NFP data, and lower unemployment,” noted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“If anything, we could see the wages growth slow. If that’s the case, investors could still have a reason to see the glass half full and bet that the US economy could achieve the soft landing that it’s hoping for,” she added.
The Federal Reserve’s latest minutes showed that most members would support another interest rate increase further out even though they skipped a rate hike in June. Strong non-farm payroll data is likely to strengthen rate hike expectations.
Ozkardeskaya noted that a strong jobs market means resilient consumer spending, which in turn means sticky inflation.
Other economic data has confirmed the US economy is in decent health as well, she said, pointing to the ISM services PMI data.
“If we connect the dots, the US manufacturing is slowing but services continue to grow, and services account for around 80% of the US economic activity, so no wonder the US jobs data remains solid and consumer spending remains resilient, and the US GDP growth comes in better than expected, and we haven’t seen that recession showing up its nose yet,” she added.
Contact the author at jon.hopkins@proactiveinvestors.com