Published: Sat, July 06, 2019
Money | By Ethel Goodwin

How major United States stock indexes fared Friday

How major United States stock indexes fared Friday

The S&P is up 19.3% so far this year.

The Dow finished Friday with a almost 44-point loss after the government reported that 224,000 jobs were added last month - much better than expected. Investors got rattled by government data showing an unexpected burst of hiring last month.

The economy added 224,000 jobs in June, the Labor Department announced Friday, describing a market that remains resilient almost a decade into the recovery from the Great Recession.

The major US stock indexes were down about 0.5% on the news after trading opened Friday, with some Wall Street investors who had bet that rate cuts this month could help prop up rising stock prices apparently selling on the news of string job growth.

But the big rebound in jobs growth - only 72,000 jobs were added in May according to revised figures released Friday - may complicate the picture for the Fed.

Fed Chairman Jerome Powell's semi-annual testimony to the U.S. Congress on the economy next week could shed light on the near-term outlook for monetary policy.

10-year Treasury yield increased 9 basis points to 2.041%. The Nasdaq Composite dropped 46.95 points, or 0.57 per cent, to 8,123.28 at the opening bell.

Trading volumes are likely to be thin at the end of a holiday-shortened week as markets were shut on Thursday for Independence Day holiday.

More specifically, because a strong labor market removes much of the impetus on the Federal Reserve to lower interest rates.

All three major indices rallied to records Wednesday following a trove of mediocre economic data that bolstered anxiety about a slowing economy and seemingly lift the odds of a Fed interest rate cut.

Historically speaking, stocks tend to benefit from lower interest rates set by the Federal Reserve. The Fed's statement came in its semiannual report on monetary policy.

The Federal Reserve should continue providing liquidity for the growing U.S. economy, said Judy Shelton, one of President Trump's picks for a seat on the Fed's board of governors.

Investors had placed a near-certainty that the Fed would cut rates at its next meeting July 30-31.

FBN's Edward Lawrence breaks down the June jobs report.

The jump in yields helped boost financial stocks, which led the gainers.

Labor participation expanded modestly by 0.1 percent to 62.9 percent - which is exactly where it was when Trump took office.

Technology companies accounted for much of the selling.

The data came as investors are pricing high on more easing monetary policy by the USA central bank in order to spur growth. Both nations have agreed to refrain from new tariffs while they open a new round of negotiations.

The Fed pushed its key policy rate up four times in 2018, angering President Donald Trump, who blamed the rate hikes for slowing economic growth and depressing the stock market.

Economists surveyed by Bloomberg expected 160,000 job gains. Still, forecasters warn the truce is fragile because the two sides still face the disputes that caused talks to break down in May. Most of the S&P 500's primary sectors reported declines. The recent rise in stock prices while bond yields are also falling is a bit of an anomaly, as money flows between asset classes often send yields and stock prices in the same direction.

Oil prices were up in early trade, with West Texas Intermediate ahead 0.35% at $57.54 a barrel, while Brent Crude was trading 1.63% firmer at $64.33 per barrel. Brent crude oil, the global standard, gained 93 cents to close at $64.23 a barrel. Bank of America rose 1%.

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