US stocks moved lower Friday after a jobs report seen as pivotal to expectations for interest-rate cuts showed much stronger hiring growth than expected.
The S&P 500 (^GSPC) fell 0.3%, while the Dow Jones Industrial Average (^DJI) shed 0.2%, coming off a lackluster session Thursday for the three major gauges. The tech-heavy Nasdaq Composite (^IXIC) dropped around 0.4%.
Investors have lifted stocks on the expectation that further data would suggest an economic cooldown. But the Labor Department report offered more evidence that parts of the economy are too hot for the central bank’s fight against inflation, feeding into a narrative of keeping rates higher rates for longer.
The highly anticipated May jobs report reinforced the idea that pulling back rates from their two-decade high likely won’t come until the Fall.
The US economy added 272,000 jobs in May, smashing expectations. However, the unemployment rate did tick higher, rising to 4.0%.
Elsewhere in markets, the wait is also on for a livestream apparently promised by GameStop (GME) booster Keith Gill, aka “Roaring Kitty.” The event, scheduled for noon ET Friday, would be the first live YouTube appearance by Gill since he helped ignite the meme stock rally three years ago.
GameStop shares closed 47% higher on Thursday, but they dropped sharply after the video game retailer said it would sell up to 75 million shares and said sales declined in the first quarter.
Also on deck is the completion of Nvidia’s (NVDA) 10-for-1 stock split, expected after the market closes. A midweek rally briefly vaulted the AI chipmaker to a $3 trillion valuation, but its shares have lost steam as short bets against the company pile up.
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Stocks slide as rate cut expectations fall
The May jobs report, which came in hotter than expected, put another dent in the narrative that the Federal Reserve will soon cut interest rates. The latest reading offered another signal that defyed previous signs of a slowdown in the economy.
The S&P 500 (^GSPC) fell 0.3%, while the Dow Jones Industrial Average (^DJI) shed 0.2%, coming off a lackluster session Thursday for the three major gauges. The tech-heavy Nasdaq Composite (^IXIC) dropped around 0.4%.
Eyes on Robinhood
Robinhood (HOOD) remains on several impressive streaks.
For one, the stock price: it’s up 27% in the last 30 days. And two, the flow of news — from debuting a new credit card, to reporting a solid first quarter, to spending $200 million yesterday to buy crypto exchange Bitstamp.
“This is a strategic move by HOOD to expand its crypto business, and we believe validates our thesis that HOOD is a great way to seek crypto equity exposure at the commencement of an exciting new crypto cycle,” said Bernstein’s Gautam Chhugani this morning.
I grabbed coffee with Robinhood’s co-founder and CEO Vlad Tenev yesterday afternoon post Bitstamp deal. The guy has his swagger back, but you can tell he has gained a whole new level of experience having gone through what he did several years back — from layoffs to testifying on the GameStop (GME) insanity. Keep an eye on what the company’s does next in wealth management.
Our last chat on Yahoo Finance Live below.
Reminder as you read the jobs report
The market still wants to believe in rate cuts for 2024.
So keep that in mind as you navigate today’s jobs report and plot through how it may influence Fed policy.
Good point by Deutsche Bank’s Jim Reid this morning after the ECB’s rate cut yesterday:
“And even though the tone was a bit hawkish in several respects, it now makes them the fourth G10 central bank to have cut rates, after Canada, Sweden and Switzerland. In turn, the move has cemented the idea that the global monetary policy cycle is moving towards an easing mode, with investors expecting further cuts on the horizon. So it marks a big shift from much of the last couple of years, when central banks were rapidly hiking rates to try to bring down inflation.”
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