Slowing US Employment Keeps S&P 500, Nasdaq at Record Highs

The stock market’s upward momentum persists, with the S&P 500 index reaching a new record high of 5,567.19 points and the Nasdaq closing at 60.38 points, up 0.40% on Friday. Investor sentiment remains optimistic despite signs of a slowing US economy, attribute to the  Federal Reserve’s elevated interest rates which is hurting the employment sector. This has led to expectations of an imminent monetary easing phase.

S&P 500 Chart Daily – Three Strong Bullish Candlesticks in a Row

The dollar started falling after the NFP jobs report on Friday, as rates declined. Yields in the US debt market dropped, particularly at the shorter end, as traders bolstered their expectations for a rate cut in September and throughout the year. A glance at the yield curve shows the 2-year yield at 4.605% (-8.7 basis points) and the 10-year yield at 4.278% (-6.9 basis points).

The falling yields also contributed to a rise in stocks, capping off a week where the NASDAQ index closed at record levels each day of the holiday-shortened week. The Dow Industrial Average increased by 0.18%, while the S&P 500 index rose by 0.55%. The NASDAQ index saw a 3.5% increase, marking its best week since April.

US Non-Farm Payrolls for June

The Non-Farm Payrolls showed a 206K increase, above the projection of 190K but way down from the previous month’s 270K. The report’s finer points, were even less striking. The higher-than-expected rise this month was more than offset by downward adjustments totaling -111K for the preceding two months. At 4.1%, the jobless rate reached its highest point since November 2021. The average hourly wage fell to 3.9% from June 2021, the lowest level since that month. A noteworthy 70K increase in government jobs contributed to the increase in Non-Farm Payrolls.

In addition, 82K was donated by the private health and education sectors, which accounted for 74% of the overall monthly gain. A cooling work market is shown by the -48K fall in temporary help services. Services for business and professionals fell by -17K, although leisure and hospitality, which had been strong post-pandemic, showed only a modest increase of 7,000, reflecting a slowdown in discretionary spending.

The stock market heatmap for Friday shows technology firms like Tesla and AMD outperforming despite mixed sectoral trends. There’s notable divergence in the semiconductors sector. Advanced Micro Devices (AMD) rose by 2.04%, while Nvidia (NVDA) declined by 0.42%. This split indicates sophisticated investor reactions to recent industry developments or earnings reports. Consumer confidence is evident, with Tesla (TSLA) experiencing a robust increase of 2.30% on Friday alone, likely driven by positive news or favorable conditions in the automotive tech market, while Amazon (AMZN) gained 0.62%.

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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