Marketbites: Unemployment Fell in June
Portfolio Manager Commentary:
Stocks finished lower on Friday and notched losses for the week as traders struggled to shake off fears that the Fed may start hiking rates again later this month. All three major averages capped a losing week. The S&P dropped 1.16%, while the Nasdaq declined 0.92%. The Dow shed 1.96% lower for its worst weekly performance since March.
“It’s kind of a mixed picture today,” said Truist’s Keith Lerner. “It’s good news that the economy is not falling apart, it’s still chugging along, but you still have these wage pressures that are going to keep the Fed likely to raise rates at the end of the month.”
Near term, Lerner said equities are ripe for a pullback following a big June and second quarter. This could lead to consolidation and choppy action as markets head into earnings season.
Chart of the Day:
New Labor Department data shows that hiring slowed in June; meanwhile, while wages rose and unemployment fell. The data will likely keep the Federal Reserve on track to raise interest rates later this month to combat inflation.
U.S. employers added 209,000 workers in June, a solid monthly gain but down from May’s revised 306,000. In the first half of this year, payrolls grew by an average of 278,000 a month, down from nearly 400,000 last year.
The unemployment rate fell to 3.6% last month from 3.7% in May. Employers ramped up wages as they competed for a limited pool of workers. Average hourly earnings grew 4.4% in June from a year earlier, matching gains in the preceding two months and remaining well above the pre-pandemic pace.
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