S&P 500 futures hold near record as jobs numbers come in

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U.S. stock futures remained near record highs on Friday as investors priced in the June jobs report, which will play a role in calculating interest rate cuts by the Federal Reserve.

S&P 500 (ES=F) futures were little changed following the report, after posting a record close in a shortened session on Wednesday. Dow Jones Industrial Average futures (YM=F) and contracts on the tech-heavy Nasdaq 100 (NQ=F) also hovered above the flatline. All three gauges were closed Thursday in observance of the July 4 holiday.

The U.S. economy added 206,000 jobs in June, more than the 190,000 Wall Street expected. But the unemployment rate unexpectedly rose slightly to 4.1%, the highest level since November 2021, in another sign that the labor market continues to cool.

Signs of looser conditions in labor data earlier this week bolstered the view that inflation will continue to cool, giving the Fed a chance to cut interest rates from their current two-decade highs. Traders are now pricing in a nearly 75% chance of a cut in September, according to CME’s FedWatch tool.

Investors are agonizing over Friday’s employment numbers, wondering whether the slowing monthly job growth is a sign of a normalizing labor market now that the pandemic is behind us, or the first signs of a broader economic slowdown.

Elsewhere, the Labour Party’s landslide victory in the UK general election has caught the attention of investors monitoring political risk, particularly as the US presidential election approaches. With some major donors urging President Joe Biden to step aside, all eyes are on Donald Trump’s growing lead in the polls and what that could mean for markets.

The AI ​​boom helped Samsung Electronics (005930.KS) see quarterly profit soar to 15 times its year-ago level, pushing the stock to its highest level in three years.

At the company level, crypto-linked stocks Coinbase Global (COIN) and Marathon Digital (MARA) lost about 6% in premarket trading as bitcoin (BTC-USD) fell to its lowest level against the dollar since February.

Live2 updates

  • 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, appear to provide a clear signal that job growth overstates the strength of the labor market.

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

    The Powell Fed’s sensitivity to inflation rates that rise above its target after the 40-year high 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 tougher for more workers.

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

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

  • 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.

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