Stocks slipped on Wall Street and Treasury yields jumped Friday after the government released a surprisingly hot jobs report, suggesting that markets may have to wait even longer for interest rate cuts from the Federal Reserve.
Quick Read
- Hotter-than-expected jobs report sends US stocks lower as markets brace for potential interest rate cuts delay
- The S&P 500 fell 0.1%, the Dow Jones Industrial Average dropped 15 points (less than 0.1%), and the Nasdaq composite decreased 0.2%.
- U.S. employers added 272,000 jobs in May, exceeding economists’ expectations and signaling continued job market strength
- The yield on the 10-year Treasury surged to 4.43% from 4.29%, and the two-year yield increased to 4.86% from 4.74% after the report’s release
- Wall Street hopes for at least one interest rate cut from the Federal Reserve by year-end, but strong job growth complicates this outlook
- Inflation remains around 3%, above the Fed’s 2% target, and a strong economy could keep fueling prices
- A cooling economy might lower inflation and prompt rate cuts, but an excessive slowdown risks causing a recession, negatively impacting stock prices
- Retail earnings indicate customers are cutting back on non-essential items
- GameStop shares plummeted 19% after reporting a quarterly loss and announcing plans to sell up to 75 million more shares
- European stocks fell, and stock indexes in Asia were mixed
The Associated Press has the story:
Hotter-than-expected jobs report sends US stocks lower
Newslooks- NEW YORK (AP) —
Stocks slipped on Wall Street and Treasury yields jumped Friday after the government released a surprisingly hot jobs report, suggesting that markets may have to wait even longer for interest rate cuts from the Federal Reserve.
The S&P 500 fell 0.1%. The Dow Jones Industrial Average fell 15 points, or less than 0.1%, and the Nasdaq composite fell 0.2%.
U.S. employers added 272,000 jobs in May, up from April and greater than economists expected. The report signals continued strength in the jobs market, which has been supporting consumer spending and the broader economy. But it potentially complicates the Federal Reserve’s path ahead for interest rates.
The yield on the 10-year Treasury jumped to 4.43% from 4.29% just before the jobs report was released. The two-year yield, which more closely tracks expectations for the Fed, jumped to 4.86% from 4.74% prior to the report’s release.
Wall Street is hoping for at least one cut to the Fed’s benchmark interest rate before the year ends. The central bank raised its interest rate to its highest level in more than two decades in an attempt to cool inflation to its target of 2%. However, inflation has been stubbornly hovering around 3% after dropping sharply over the last two years. A strong economy could keep fueling prices.
A cooldown for the economy can drive inflation lower and prompt the Fed to deliver the cuts to interest rates that traders desire so much. The danger is if the slowdown for the economy overshoots and turns into a recession, which would ultimately hurt stock prices.
Wall Street has also been monitoring earnings from retailers, which have shown that customers have been pulling back on items that aren’t essentials.
GameStop, the troubled video game retailer at the center of the meme stock craze, slumped 19% after reporting a quarterly loss and saying it planned to sell up to 75 million more shares.
Elsewhere, European stocks fell and stock indexes in Asia were mixed.
