U.S. stock prices close lower as job growth slows down expectations of rate cuts

NEW YORK (Xinhua), June 7 – U.S. stock prices ended lower on Friday as the U.S. labour market added more than expected in May. This indicates resilience despite signs of economic slowdown.

The Dow Jones Industrial Average dropped by 87.18 point, or 0.22 per cent, to 38.798.99. S&P 500 dropped 5.97 points or 0.11 percent to 5,346.99. The Nasdaq composite index fell 39.99 points or 0.23 percent to 17,133.13.

Seven out of 11 S&P 500 primary sectors finished in the red. Materials and utilities were the worst laggards, losing 1,09 percent each. Financials and technology were the top gainers, with 0.35 percent and 0.20%, respectively.

The Bureau of Labor Statistics reported that the nonfarm payroll added 272,000 jobs in May, exceeding the expectations of economists of 182,000. The unemployment rate increased to 4 percent, up from 3.9 percent the month before. The increase in April was 165,000.

These numbers highlight the Federal Reserve’s difficulty in deciding how and when to lower interest rates. The economy and the labor market are still strong, but inflation is persistent. This justifies the argument for keeping rates higher for longer. There are new concerns such as the impact of inflation on low-income consumers, and rising household debt.

Robert Sockin is a senior global economist at Citi. He said that the longer Fed keeps rates at the same level, the more likely it is for the economy to crack. Gary Cohn, former National Economic Council Director and IBM vice chairman, said that people should be grateful for a healthy economy. “At the end, it is all about the economy. It’s about GDP growth and corporate earnings. The health of consumers will always win in the long run.”

The yield on the two-year U.S. Treasury bill jumped to 4.887 percent after Friday’s employment report. Meanwhile, the yield for the 10-year Treasury bond climbed to 4.434 percent at 4:30 pm EDT. According to the CME FedWatch tool, investors now price in a 49 per cent chance of the Fed cutting rates in September. This is down from the 68.7 per cent chance they had just one day earlier.

Nvidia has executed a 10-for-1 split of its stock. This means that shareholders who own shares will receive an additional nine shares after Friday’s market close. The trading on a split adjusted basis will start on Monday. Nvidia shares are currently trading at 1.208.88 U.S. dollar.

Related Articles