US indexes fall after May jobs report resets rate cut outlook

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  • U.S. stocks fell Friday as investors digested the May jobs report.

  • A strong jobs report pushed back expectations of a Fed interest rate cut later this year.

  • “Today’s data undermines the message that other recent economic data has given about a slowing U.S. economy.”

U.S. stocks ended Friday slightly lower, but ended the week up more than 1% following a May jobs report It arrived much hotter than expected.

Data showed 272,000 jobs were added to the economy last month, well above economists’ estimates of around 180,000.

The report also sees the unemployment rate rising from 3.9% to 4.0%, suggesting some weakness in the labor market to offset the higher-than-expected payroll numbers.

At the same time, the average hourly wage rose from 3.9% per year to 4.1%, reigniting some concerns about inflation and ruled out the likelihood of a Fed interest rate cut to December from September.

According to the CME FedWatch tool, there is only a 47% chance of an interest rate cut in September, down from 55% before the jobs report was released.

“Today’s data undermines the message that other recent economic data has given about a slowing U.S. economy and closes the door to a rate cut in July.” said Seema Shah, chief global strategist of Principal Asset. “We still expect the Fed to cut rates in September, but another set of numbers like today would likely eliminate that question as well.”

Here is where the American indices stood on Friday at the 4 p.m. close:

Here’s what happened today:

In commodities, bonds and cryptocurrencies:

  • West Texas Intermediate Crude oil fell 0.34% to $75.29 a barrel. Brent crudethe international benchmark, fell 0.60% to $79.39 per barrel.

  • Gold sold down 3.38% to $2,310.00 per ounce.

  • The 10-year Treasury yield jumped 14 basis points to 4.43%.

  • Bitcoin fell 2.20% to $69,216.

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