Wall Street looks at jobs data
Investors bet on resilient economy
07/08/2022 10:36 p.m
The US jobs report for June is better than expected. Nevertheless, concerns about further rate hikes persist on Wall Street. According to a media report, Elon Musk is dissatisfied with information from Twitter – the stock is slipping.
The US stock markets have walked a fine line between confidence in the economy and fears of a recession. The background was the US job market report for June, which was significantly better than expected. On the one hand, it showed no negative effects on the interest rate hikes that had already taken place and thus spoke for a strong economy, on the other hand, it fueled concerns about further aggressive interest rate hikes by the US Federal Reserve, which had previously spoken of an overheated labor market. However, sharply rising interest rates could not only slow down growth but also lead to a recession, according to fears on the financial markets.
However, in the course of trading, the optimists who are betting that a soft landing will be possible in the end gained the upper hand. “It gives the Fed a little more confidence that it can be more aggressive without seriously damaging the job market,” commented Edward Jones investment expert Mona Mahajan, adding, “At some point it’s going to hit the economy.”
After losses in the opening trade, the indices turned upwards at midday and defended small gains at least until shortly before the end of trading. Confidence in the economy also had an impact on the oil market, with oil prices rising by around 2 percent.
Of the Dow Jones Index fell minimally by 0.1 percent to 31,338 points. For the S&P 500 was also down marginally after four consecutive days of gains Nasdaq indices closed slightly higher. According to initial information, there were 1,624 (Thursday: 2,527) price winners and 1,610 (725) losers on the Nyse. 146 (133) titles closed unchanged.
In the bond market, prices fell, so yields rose, consistent with the underpinning rate hike expectations. The 10-year yield rose 8 basis points to 3.08 percent. The yield curve thus remained inverted, signaling the risk of a recession.
Wage increase within the expected range
While the unemployment rate remained unchanged at 3.6 percent despite significantly more jobs being created than expected, the increase in hourly wages was within the expected range at 5.1 percent compared to the previous year. Wage growth at this persistently high level keeps pressure on the central bank to tackle inflation, observers said.
Of the dollar the bottom line is that little has changed, especially as interest rate expectations have not changed. Of the Euro last cost 1.0180 dollars, in the daily low it was already available for 1.0072.
We are now eagerly awaiting next week’s US inflation data. Consumer prices are expected to have risen 1.0 percent month-on-month in June, and 8.8 percent year-on-year. It would be the highest increase in the US since December 1981.
Musk dissatisfied with Twitter statement
For the Twittershares fell 4.8 percent. As the “Washington Post” reported, citing informed people, the team around Tesla boss Elon Musk, who was willing to take over the company, considers the information requested and provided by Twitter to be insufficient. The background is Musk’s concerns that many user accounts on the platform could be fake, which could stand in the way of the takeover. Meanwhile, Twitter announced that it would be cutting jobs because of the slowdown in business and the possible upcoming takeover.
game stop fell 4.9 percent after the video game retailer also announced job cuts and the split from its chief financial officer. The day before, the price had shot up by 15 percent with the news of a stock split. Levi Strauss gained 1.0 percent after the jeans maker beat expectations with second-quarter sales and profit.