Friends
Stocks couldn’t decide whether they liked this morning’s government employment data or not as they gyrated from up to down throughout the trading session. Now about that jobs number. 272,000 new jobs were created in May which was quite a bit higher than the 185,000 expected. The unemployment rate ticked up to 4% while wages increased 4.1% year over year. So, despite the unemployment rate actually ticking up a notch, the robust jobs number and the hotter than expected wage increase were the story. This week’s narrative that everything was slowing and that a weakness in the job market was developing was somewhat refuted by today’s jobs number. The calls for a rate cut from the Fed next week or even in July would appear to be premature. Jobs still appear to be plentiful, and wages continue to climb.
As mentioned, market participants couldn’t really decide what they wanted to do with this data. After all the gyrations, by the close the Dow Jones Industrial Average was down 87 points to finish the day at 38,798. The S&P 500 was down almost 5 points to close at 5,346. The Nasdaq Composite Index was down nearly 40 points to close at 17,133. Gold was down $82 to trade at $2,309, while oil was down $.24 to trade at $75.31 per barrel WTI.
The takeaway this week is that sure the economy is slowing a bit but not necessarily at a pace that would give the Fed comfort in lowering interest rates just yet. I’ve said all year that despite some valuation issues with certain areas of the stock market, the environment has been and still is pretty good for stocks. No, we aren’t getting 6 rate cuts this year like some analysts predicted but it still seems likely the next move in the Fed Funds rate would be down. That still might be good enough for the bulls at least for the moment.
Have a great weekend everyone.
