US Stocks End Week Lower After Slew of Jobs Data: Markets Wrap

(Bloomberg) — US stocks started July logging losses as traders parsed a batch of labor market readouts.

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The S&P 500 fell 1.2% over the shortened holiday week while the Nasdaq 100 slid 0.9%. Yield on the two-year Treasury drifted down to 4.94% Friday. Investors were digesting government jobs data that fell short of estimates but brought signs that wage inflation remained a threat to the Fed’s fight against price gains. Overall, the data showed signs of cracks in the American labor market, a day after a private payrolls report suggested resilience that may warrant several more rate hikes. Instead, traders reverted to expectations that the Fed will lift rates at its meeting later this month. The odds for another hike this year were less than 50%.

Among notable movers, Levi Strauss & Co. fell sharply after lowering its outlook for the year while electric-vehicle manufacturer Rivian Automotive Inc. climbed for the eighth-straight session.

Chicago Fed President Austan Goolsbee left the door open for more data to sway officials ahead the central bank’s next meeting. “We’re getting to a more sustainable pace, which is what we need to do for inflation,” Goolsbee said of Friday jobs data in an interview on CNBC.

Read more: Goolsbee Says Fed on Path to Curb Inflation Without Recession

Friday’s payroll numbers are not yet weak enough to stop the central bank’s tightening, according to Seema Shah, chief global strategist at Principal Asset Management.

“Jobs growth has slowed but remains too strong to justify an extended Fed pause,” she said. “More significantly, with average hourly earnings surprising to the upside, wage pressures are still too strong. Today’s report will give the Fed little reason to hold off from hiking at the July meeting.”

June’s 0.4% wage growth indicates businesses are still desperate to draw in and keep workers, according to Jeffrey Roach, chief economist at LPL Financial.

“The latest jobs report all but ensures the Fed will increase rates later this month,” he wrote.

Stocks have been losing ground in July after a strong first half of the year as hawkishness from central banks from the US to the UK dampens hopes of a soft landing for the global economy. Technology shares have been one of the hottest trades, driven by the buzz around AI, but Bank of America Corp. strategists said investors who piled into the sector risk being caught off-guard in the selloff sparked by rate hikes.

“We say ‘sell the last hike’ will hit tech hardest,” the BofA team led by Michael Hartnett wrote in a note. But if excitement over AI continues, they said the “baby bubble” that currently exists in a handful of Big Tech shares will mature into a larger one in the second half.

Dallas Fed President Lorie Logan voiced her concerns on Thursday that inflation was still running too hot and more tightening was needed. Policymakers elsewhere share that view, with European Central Bank President Christine Lagarde saying there is still “work to do” to bring inflation under control.

Meanwhile, gold advanced while crude futures traded above $73 a barrel.

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Key Events This Week:

Some of the main moves in markets today:

Stocks

• The S&P 500 fell 0.3% as of 4:03 p.m. New York time
• The Nasdaq 100 fell 0.3%
• The Dow Jones Industrial Average fell 0.6%
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index fell 0.7%
• The euro rose 0.7% to $1.0967
• The British pound rose 0.7% to $1.2834
• The Japanese yen rose 1.4% to 142.10 per dollar

Cryptocurrencies

• Bitcoin fell 0.3% to $30,230.46
• Ether fell 1.1% to $1,863.42

Bonds

• The yield on 10-year Treasuries advanced three basis points to 4.06%
• Germany’s 10-year yield advanced one basis point to 2.64%
• Britain’s 10-year yield declined one basis point to 4.65%

Commodities

• West Texas Intermediate crude rose 2.6% to $73.66 a barrel
• Gold futures rose 0.8% to $1,931.30 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from John Viljoen, Tassia Sipahutar, Macarena Muñoz and Sydney Maki.

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