New York — Stocks slipped on Wall Street and Treasury yields jumped Friday after the government released asurprisingly 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% as of 10:01 a.m. Eastern.
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.
President Joe Biden shared his thoughts about the new jobs report, saying:
"The great American comeback continues, but we still have to make more progress. On my watch, 15.6 million more Americans have the dignity and respect that comes with a job. Unemployment has been at or below 4% for 30 months—the longest stretch in 50 years. And a record high share of working-age women have jobs. I will keep fighting to lower costs for families like the ones I grew up with in Scranton. I’m fighting corporate greed by calling on corporations with record profits to lower prices—as Target and Walmart have for grocery prices. I’m fighting to make rent more affordable by building 2 million new homes. I’m fighting to lower the cost of health care and prescription drugs, like insulin and inhalers. Congressional Republicans have a different vision—one that puts billionaires and special interests first. The Republican plan would increase inflation by repealing the Affordable Care Act, siding with Big Oil to raise utility bills, letting Big Banks rip off Americans, and blow up the debt by slashing taxes for billionaires. I will never stop fighting for Scranton—not Park Avenue."
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.
Merit Street Media
