Published: Sat, July 06, 2019
Markets | By Erika Turner

Wall Street opens lower after strong jobs data

Wall Street opens lower after strong jobs data

Federal Reserve Chair Jerome Powell testifies to Congress next week and looks set to validate market expectations of precautionary interest rate cuts to head off the threat of a downturn. However, trade uncertainty is fueling these cuts and will threaten sustained USA expansion until a deal with China is struck. "That means the Fed could still not be afraid of cutting rates in July".

Nonfarm payrolls increased by 224,000 last month as government employment rose by the most in 10 months, the U.S. Labor Department reported.

A really encouraging jobs report that suggests the broad economy is shrugging off the US-China trade uncertainty.

Economists had forecast the USA economy added 165,000 jobs in June, after a stunningly low 75,000 jobs were created in May, according to Dow Jones. The revision implies an average of 171,000 job gains over the past three months. Nominal average hourly earnings rose by 3.1 percent over the past 12 months, marking the 11 straight month that that year-over-year wage gains were at or above 3 percent. Trump has said he is in "no hurry" to make a deal and on Wednesday accused China and Europe of "playing big currency manipulation game and pumping money into their system in order to compete with US". This measure closely correlates to the unemployment rate.

US stocks have been on a tear, riding the momentum of their best June in years into July.

The employment rate for prime-age workers was unchanged in June.

Shares of banks, which tend to benefit from higher interest rates, rose 0.76% and helped drive a 0.24% gain in the financial sector, which was the only major index in the positive territory. There is evidence of further slowing, with the annualized rate of increase from the first quarter to the second quarter at just 2.7 percent.

Watch Nick Kyrgios ace Rafael Nadal with an underhand serve
Sam Querrey backed-up his terrific win over Dominic Thiem in the first round by blasting past Andrey Rublev 6-3 6-2 6-3. Two-time Wimbledon champion Petra Kvitova, No. 9 Sloane Stephens and No. 15 Wang Qiang also advanced to third round.

That rate cut, expected later this month, could now be in doubt. Stocks on Wall Street slipped.

A "Now Hiring" sign sits in the window of Insomnia Cookies in Cambridge, Massachusetts, US.

On Friday, the Fed reiterated that it would act as necessary sustain the economic expansion, while noting that most Fed officials have lowered their expectations for the course of rates.

"There is no inflationary pressure coming from the labor side", said Sung Won Sohn, an economics professor at Loyola Marymount University in Los Angeles. The market is still on track to close out the week with a gain. Some of the recent drop in the jobless rate has been because of people leaving the labor market. The unemployment rate ticked up to 3.7%, up from 3.6% for the previous two months as more people began searching for work.

Economists have estimated that the government will report that employers added 164,000 jobs in June, according to data provider FactSet. Annual wage growth remains at 3.1%, which is a little disappointing, given the tightness of the jobs market. Growth in the services sector, which includes such varied industries as restaurants, finance and recreation, slowed in June.

FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. In the first half of 2019, growth has averaged about 35,000 per month, compared with an average monthly gain of 47,000 a year ago. In June, employment increased in computer and electronic products - which added 7,000 jobs - and in plastics and rubber products, which created upward of 4,000.

But even if those sectors decline, job growth has generally been supported by the health care and business services sectors.

Like this: