(CercleFinance.com) – This session on Wall Street remained a strange paradox until around 7:54 p.m. (Paris time) US: the indices continued their bullish rally with a 3rd consecutive intraday absolute record on the S&P500 at 5,370 then on the Nasdaq- 100 to 19,135.
The Nasdaq-100 ended down -0.1% (just like the ‘S&P’) at exactly 19,000, for the symbol.
And while Wall Street explored new, uncharted territories,
the bond markets continued to inexorably widen their losses following the publication of the ‘NFP’… and it was only around 8 p.m. that investors realized that this could pose a problem.
The T-Bonds began their nosedive following the publication of unexpectedly strong figures with 100,000 more job creations than the 172,000 anticipated.
T-Bonds erased 70% of their gains from the beginning of the week in one session: +16Pts to 4.438% (compared to 4.50% last Friday).
The ‘2 years’ soared by +17 points to 4.89% and the ’30 years’ by +12 points to 4.555%.
The American economy generated +272,000 non-agricultural jobs in the month of May, according to the Department of Labor, while non-agricultural job creations for the previous two months were only slightly revised downwards, from 315,000 to 310,000 for March and from 175,000 to 165,000 for April, for a total balance of -15,000 for these two months.
The unemployment rate increased by 0.1 point to 4%, where economists expected stability at 3.9%, while the labor force participation rate stood at 62.5%. (NB: the unemployment rate has been below 4% for more than two years now, unheard of since the 1950s).
The other negative indication is that average hourly income increased at an annual rate of 4.1% instead of 3.9%.
It will be complicated for the FED to adopt a fairly dovish tone for next week’s FOMC… and the consensus regarding a rate cut in September suddenly falls from 71% to 50%.
The trend reversal on Wall Street remains very modest in scale and the rise/fall ratio was fairly balanced: the main contributors to the decline in the S&P500 were ‘defensives’ like Biogen -2.8%, Moderna -2.4% , United Health -2.2% then Alphabet -1.4%, AT&T -1.1%.
The sector of individual home builders finished at the bottom with declines of -2% on average (Pulte Group and DR Horton at -2.5%, Beazer Homes and Lennar at -1.4%).
Among the sharpest increases: Crowdstrike +2.5%, Palo Alto +2%, Adobe +1.6%, Apple +1.2%, Intel +1%.
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