Wall Street had a rocky ride today, ending the day on a downswing after the release of the jobs data. Investors had their hands full trying to make sense of the weaker-than-expected growth revealed in the U.S. jobs report. They are also eagerly awaiting more economic data and corporate earnings in the coming weeks.
In June, the U.S. saw the smallest increase in jobs in two and a half years, but the persistent strength in wage growth indicated that the labor market remains tight. The market was hopeful for most of the afternoon, with the benchmark S&P 500 showing solid gains. However, things took a turn for the worse as stocks experienced a sell-off toward the end of the session.
“As we head into a crucial week with the beginning of earnings season and an important mid-week inflation reading, investors are feeling more cautious,” remarked Quincy Krosby, chief global strategist at LPL Financial (NASDAQ:LPLA).
The latest report on nonfarm payrolls revealed an increase of 209,000 jobs last month, which followed a sell-off on Thursday triggered by a surge in private payrolls for June. This surge raised concerns that the Federal Reserve might aggressively raise interest rates to curb inflation.
“I believe today’s jobs report aligns with what the Fed would like to see,” said Josh Jamner, an investment strategy analyst at ClearBridge Investments. He added, “It’s not to say that the mission is accomplished or the job is done. However, continued cooling in the job market will ultimately make their lives easier.”
The Dow Jones Industrial Average closed down 187.38 points, a decline of 0.55%, resting at 33,734.88. Similarly, the S&P 500 lost 12.64 points or 0.29% to settle at 4,398.95, while the Nasdaq Composite dropped 18.33 points or 0.13% to 13,660.72.
Among the S&P 500 sectors, the defensive groups experienced the most significant decline, with consumer staples falling by 1.3%. On the other hand, energy stocks gained 2.1%, and materials rose by 0.9%.
Ending the day on a positive note, the small-cap Russell 2000 saw a gain of 1.2%.
After a strong first half of the year, the major indexes wrapped up the week with losses. The S&P 500 recorded a decline of about 1.2%, the Dow slipped by roughly 2%, and the Nasdaq dropped by 0.9%.
Despite pausing in June, the Federal Reserve is still widely expected to raise rates at its upcoming meeting later this month. Job growth remains above the pace seen in the decade before the pandemic.
Chicago Fed President Austan Goolsbee expressed his agreement with fellow U.S. central bankers regarding the need for a couple more rate hikes this year to combat excessive inflation.
In the realm of corporate news, Levi Strauss & Co (NYSE:LEVI) experienced a 7.7% drop in shares after the denim clothing maker reduced its annual profit forecast.
On the flip side, Rivian Automotive’s shares surged by 14.2% following the electric vehicle maker’s better-than-expected quarterly deliveries.
U.S.-listed shares of Alibaba (NYSE:BABA) saw an 8% gain after Chinese authorities announced a $984 million fine on Ant Group, signaling the end of the affiliate fintech company’s extensive regulatory overhaul.
On the NYSE, advancing issues outnumbered decliners with a ratio of 2.49-to-1, while on Nasdaq, the ratio was 2.00-to-1 in favor of advancers.
During the trading day, the S&P 500 marked 11 new 52-week highs and five new lows, while the Nasdaq Composite recorded 45 new highs and 63 new lows.
Trading was active, with approximately 10.3 billion shares changing hands on U.S. exchanges, slightly below the 11.1 billion daily average over the past 20 sessions.