Ankika Biswas and Lisa Pauline Matakal
(Reuters) – The Dow Jones Industrial Average and the S&P 500 index lost direction on Friday as investors assessed mixed employment data for an indication of the pace of the Federal Reserve’s monetary easing, while gains in big technology stocks lifted the Nasdaq.
Futures initially rose after a closely watched report from the U.S. Labor Department showed the unemployment rate rose to 4.1% in June, beating expectations of it remaining unchanged at 4%.
But nonfarm payrolls rose by 206,000 in June, beating expectations of an increase of 190,000, and May’s figure was also revised sharply downward, from 272,000 to 218,000.
Average hourly earnings rose 0.3%, as expected, but lower than the 0.4% increase in May.
“This is a relatively mild report. The market generally expected job growth to be a little lower, but the numbers were lower than the May report, which really worried some people,” said Emily Bowersock Hill, CEO of Bowersock Capital Partners.
“If you’re the Fed, you would say: What happened in May is not as bad as we thought it would be. The data is not bad enough to surprise the market, and it’s not bad enough to worry the Fed.”
Treasury yields fell after the data was released, while large, interest-rate-sensitive stocks such as Apple Inc., Amazon.com Inc. and Meta Platforms Inc. rose between 0.7% and 2.2%.
Alphabet shares rose 1.6% to a record high. Utilities and consumer discretionary stocks led sector gains, while the energy sector led declines.
According to LSEG, the chances of a 25 basis point cut in September after the employment data are around 75%, with traders continuing to expect around two rate cuts this year.
Tesla Inc. hit its highest price since early January on Wednesday before reversing early gains and falling 0.6%.
Other data released this week suggested the U.S. economy is losing momentum, leading market participants to increasingly expect multiple rate cuts this year.
That helped the S&P 500 and Nasdaq continue to hit record closing highs despite a shortened trading day on Wednesday for the holiday. Trading volume was slow this week as stock markets were closed on Thursday for Independence Day.
As of 9:50 a.m. ET, the Dow Jones Industrial Average was down 33.29 points, or 0.08%, to 39,274.71, the S&P 500 was up 0.80 points, or 0.01%, to 5,537.82 and the Nasdaq Composite was up 41.80 points, or 0.23%, to 18,230.10.
All three major Wall Street indexes are trending higher on a weekly basis. With second-quarter earnings reports looming, it remains to be seen whether Wall Street’s rally will extend beyond the major mega-cap stocks and whether these companies’ results will be able to support continued higher prices.
Macy’s shares rose 10 percent after reports that Arkhouse Management and Brigade Capital had increased their offer to buy the department store chain to about $6.9 billion.
Declining issues outnumbered advancing ones by a 1.55-to-1 ratio on the NYSE and a 1.51-to-1 ratio on the Nasdaq.
The S&P index posted 12 new 52-week highs and six new lows, while the Nasdaq posted 18 new highs and 54 new lows.
(Reporting by Ankika Biswas and Lisa Matakkal in Bengaluru; Editing by Saumyadev Chakrabarty and Shaunak Dasgupta)
