- Wall Street lower at the close
- Jobs data smashes estimates
- 50% chance of rate cut in September
4:05pm: Stocks slip
US stocks finished Friday’s session on the back foot as a strong jobs report reignited concerns that the Federal Reserve may delay cutting interest rates.
The Nasdaq and the Dow Jones both closed down 0.2% at 17,133 points and 38,798 points respectively while the S&P 500 slipped 0.1% at 5,346 points.
Shares of GameStop closed almost 40% lower at about $28 after the video game retailer posted disappointing first quarter sales and said it plans to sell up to 75 million shares.
12:20pm: Volatility strikes as expectations for rate cuts waver
Markets were more volatile on Friday following a much stronger-than-expected May jobs report, which cast doubt on expectations for imminent interest-rate cuts.
Around noon, the S&P 500 saw a 0.1% increase, while the Dow Jones recorded a 0.2% gain, following a lackluster session for the three major gauges on Thursday. Conversely, the tech-heavy Nasdaq stayed in negative territory, hovering slightly below the flatline.
The Labor Department's report of 272,000 jobs added in May surpassed forecasts, but the unemployment rate rose slightly to 4.0%.
Market reaction included a sharp sell-off in US rates and a rally in the US dollar, reflecting recalibrated expectations for interest-rate cuts.
"The bottom line is that the stronger-than-expected May employment report remains consistent with our monetary policy outlook for staying on hold," analysts at Bank of America commented.
"This report showed solid payroll gains with positive implications for consumer spending. We expect the Fed to stay on hold for now and start a gradual cutting cycle in December which will depend on a moderation in the inflation data.
"The economy may be cooling, but it is not cool."
Investors also awaited a livestream by GameStop booster Keith Gill and the completion of Nvidia's stock split.
9.54am: US stocks open lower
Wall Street has opened lower after the prospects of a September rate cut were reduced by stronger-than-expected jobs data.
The S&P 500 dropped around 0.18%, or 52 points, while the Nasdaq dropped 0.25%, or 42 points.
Meanwhile, the Dow Jones shifted 0.07% lower.
XTB research director Kathleen Brooks said the downturn in US stocks could continue ahead of the Federal Reserve's meeting next week.
"European stocks have extended losses in the aftermath of the payrolls report, and US stock index futures have turned lower. The surge in US Treasury yields could hurt the outlook for US big tech firms, which tend to rise when Treasuries fall," she said ahead of the market opening.
She added that the chance of a September rate cut had now dropped from 60% to 50%.
In equities, GameStop was one of the largest movers falling back from premarket highs of around 30%, which were led by Roaring Kitty, to be down 5% following an earn
8.40am: Strong US jobs data dents rate cut hopes
US markets are set to open flat on Friday following jobs data coming in stronger than expected, indicating health in the jobs market and damaging hopes of a rate cut.
Non-farm payrolls came in at 272,000, up from last month's 165,000 and surpassing the market's consensus of 185,000.
Unemployment rates lifted by a single percentage point month-on-month to 4%, lifting ahead of estimates.
Signs of strength in the jobs market could hamper the US Federal Reserve's decision to cut rates in September, with the central bank also set to meet to decide borrowing rates next week.
The CME Fedwatch tool currently puts a 0% chance of a rate cut at Wednesday's meeting.
There are several reasons to hold rates steady, including low unemployment, inflation above the 2% target, continued economic growth, and to preserve impartiality ahead of the Presidential election, said Russ Mould, investment director at AJ Bell.
Henk Potts at Barclays Private Bank said that while unemployment rates will remain around 4% over the coming months, it will "still be low when compared to historical standards.”
The FTSE 100 dropped around 20 points following the news.