Jobs Friday Strikes Again

By Connor Smith |  Friday, June 3 Good News Is Bad News. Stocks were on track to rise for their second-straight week. Then came Jobs Friday. The Labor Department reported that the U.S. added 390,000 jobs in May, compared to economists' expectations for 328,000 jobs. Average hourly wages grew 0.3%, compared to expectations for 0.4%. Following the mixed report, the S&P 500 fell 1.6%. The large-cap benchmark finished the holiday-shortened week down 1.2%. The Dow Jones Industrial Average fell more than 1%, bringing its weekly loss to 0.9%. The Dow has fallen for nine of the past 10 weeks, and is down 9.5% in 2022. After some breakout performances from tech stocks on Thursday, the Nasdaq Composite stumbled in Friday trading with a 2.5% drop. It's down about 1% on the week and 23% in 2022. My colleague Randall Forsyth writes that the good news on jobs is bad news for stocks and bonds because the stronger-than-expected report means the Federal Reserve remains on track to raise interest rates in the coming months. Randy writes: None of these data are likely to induce the Fed to slow its pace of rate increases. The CME FedWatch site shows half-point hikes remain near-certainties, based on federal-funds futures prices. And a September half-point rise has a 62.6% probability, nearly double that of a week ago, when fixed-income markets were betting on a slowing in the pace of Fed rate increases. While payrolls growth has slowed from the 500,000-plus average pace of the past 12 months, consumer price inflation is running at over 8%. There is agreement both in Washington and on Main Street that soaring prices are the nation’s top problem. Of course, the Fed can’t do anything about the jump in energy costs or supply shortages, but it remains up to the monetary authorities to rein in demand to slow the pace of price increases. Randy does note that technology firms have recently announced hiring pauses and job cuts. Tesla stock fell 9% today following a report from Reuters that CEO Elon Musk wants to cut staff by 10%. Randy concludes: The Fed has only just started the process of monetary tightening, which is nearly always negative for stock and bond prices. Investors shouldn’t be swayed otherwise. Watch our weekly TV show on Fox Business Saturday or Sunday at 10 a.m. or 11:30 a.m. ET. This week, see interviews with Qualcomm CEO Cristiano Amon and oil expert Daniel Yergin.

 

DJIA: -1.05% to 32,899.70 S&P 500: -1.63% to 4,108.54 Nasdaq: -2.47% to 12,012.73 The Hot Stock: Quanta Services +3.7% The Biggest Loser: Tesla -9.2% Best Sector: Energy +1.3% Worst Sector: Consumer Discretionary -2.9%