June Jobs on Deck

By Nicholas Jasinski | Thursday, July 1

Streaking. The S&P 500 notched its sixth-straight record high close today, on its longest winning streak since early February. The index added 0.5%, ahead of the Nasdaq Composite's 0.1% rise and the Dow Jones Industrial Average's 0.4% gain.

The rally was broad, but S&P 500 oil and gas stocks did particularly well today as oil prices hit a nearly two-year high, above $75 a barrel. That rise came even as a highly anticipated meeting of the Organization of the Petroleum Exporting Countries and its allies was postponed to Friday. The United Arab Emirates reportedly disagreed with the slow pace that other OPEC members wanted to increase oil production over the coming months and year.

Global oil demand has been rising faster than supply over the past year, pushing up prices. WTI crude oil—the main U.S. benchmark—settled up 2.4%, at $75.23 a barrel today, its highest level since October 2018 and up more than 50% since the start of the year.

It's not the long weekend yet. All eyes tomorrow morning will be on the June jobs report from the Bureau of Labor Statistics, which is expected to show a gain of 625,000 jobs and an unemployment rate of 5.6%. 

Here's Barron's Lisa Beilfuss previewing the report:

By this point in the recovery, economists anticipated around 1 million payroll gains per month. But since the start of the year, job gains have been a fraction of that. Companies, facing booming demand, have been complaining of a shortage of workers. The reasons run from enhanced unemployment benefits and a lack of childcare to early retirements and ongoing virus concerns. 

June is the first month where unemployed workers in many states lost the extra $300 per week in jobless pay, ahead of the federal program’s September expiration. Economists say it’s too soon for the early end of enhanced benefits to show up in hiring, and hiring challenges connected to childcare won’t fully resolve before the fall. It is possible, however, that vaccination numbers and falling Covid-19 cases brought some people back into the workforce as companies raise pay and offer bonuses to attract help.

Like in April and May, the limits on employment growth in June were likely to have been largely on the supply side. Federal Reserve officials and economists have predicted that that will ease in the fall, when job gains could accelerate again. Markets seem to be comfortable with that thesis as well—that all those jobs are coming back, just not for a few more months.

Read the rest of Lisa's preview here.

DJIA: +0.38% to 34,633.53
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