Stocks waver as jobs report beats expectations

U.S. stocks faltered on Friday after a jobs report showed stronger-than-expected hiring growth, seen as key to expectations for interest rate cuts.

The S&P 500 (^GSPC) rose 0.2%, while the Dow Jones Industrial Average (^DJI) gained 0.3%, coming off a lackluster session Thursday for all three major gauges. The tech-heavy Nasdaq Composite (^IXIC) was in the red, hovering just below the flatline.

Investors have boosted stocks on expectations that more data will suggest an economic cooling. But the Labor Department report provided further evidence that some parts of the economy are too hot for the central bank’s fight against inflation.

The much-anticipated May jobs report reinforced the view that rates’ pullback from two-decade highs won’t come until the fall.

The U.S. economy added 272,000 jobs in May, beating expectations. However, the unemployment rate rose to 4.0%.

read more: How does the labor market affect inflation?

Elsewhere in the markets, there’s also a wait for a live broadcast promised by GameStop ( GME ) booster Keith Gill, aka “Roaring Kitty.” The event, scheduled for Friday at noon ET, will be Gill’s first live YouTube appearance since sparking a meme stock rally three years ago.

GameStop shares closed up 47% on Thursday, but fell sharply after the video game retailer said it would sell up to 75 million shares and that first-quarter sales had slowed.

Nvidia’s ( NVDA ) expected 10-for-1 stock split ends after the market closes. A midweek rally briefly lifted the AI ​​chipmaker to a $3 trillion valuation, but its shares lost steam as short bets piled up against the company.

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  • Jobs report is a ‘Rorschach blot’ for mixed interpretations

    The U.S. labor market added more jobs in May than expected, but the report contained data for both optimists and pessimists in what Comerica Bank chief economist Bill Adams called a Rorschach blot.

    Data from Bureau of Labor Statistics Labor market data released on Friday showed the addition of 272,000 nonfarm payroll jobs in May, significantly more additions than the 180,000 expected.

    But the unemployment rate rose to 4% from 3.9% the previous month.

    “Confidents about the growth outlook will see solid wage growth as the expansion continues unabated,” Adams said in a note Friday. “Pessimists will focus on a sharp increase in the unemployment rate from early 2022, an increase in part-time employment and a decline in temporary work, often a leading indicator of broader labor market weakness.”

    How market watchers interpret how recent jobs figures play out from an interest rate perspective can also be interpreted in different ways.

    “Most central bank policymakers will see May’s strong wages growth and rising earnings as a sign that immediate rate cuts are not needed,” Adams noted. But he added that unemployment has risen in the past year, which the central bank sees as a sign that inflation is on a more moderate path.

    “If core inflation continues to slow over the next few months, the central bank will be comfortable cutting interest rates with a quarter percentage point rate cut at their September meeting.”

  • Stocks trending in morning trade

    Here are some of the leading stocks on Yahoo Finance’s Trending Tickers page during Friday morning trading.

    Gamestop (GME): Shares of video game retailer and meme stock Extraordinaire fell 19% after reporting quarterly results on Friday morning. Missed analyst estimates Also, announcing the stock sale just hours before the much-anticipated live broadcast of “Roaring Kitty,” which bullish retail investor Keith Gill has used in the past.

    document identifier (Document) The software company, which specializes in electronic contracts, shed 8% after reporting second-quarter billings guidance below Wall Street expectations. Investors brushed past the more positive updates, however, as the company beat earnings estimates and boosted its share repurchase program by a billion outstanding common shares.

    lift (LYFT): Shares of the ride-hailing company rose 3% Friday morning, following the company’s decision to revise its growth forecasts upward and reaffirm its guidance for the second quarter. Lyft now expects 15% growth in bookings over the next three years.

    Vail Resorts (Mtn) The mountain resort fell 13% as the company missed revenue expectations and lowered its full-year EBITDA outlook. CEO Kirsten Lynch pointed to spring ticket attendance not picking up as one reason for the lower guidance.

  • Stocks fall as rate cut expectations fall

    A hotter-than-expected May jobs report put another dent in the narrative that the Federal Reserve will soon cut interest rates. The latest reading provided another signal that bucked earlier signs of a slowdown in the economy.

    The S&P 500 (^GSPC) fell 0.3%, while the Dow Jones Industrial Average (^DJI) fell 0.2%, ending a dull session Thursday for all three major gauges. The tech-heavy Nasdaq Composite ( ^IXIC ) was down 0.4%.

  • Eyes on Robinhood

    Robinhood has many impressive streaks.

    One, the stock price: it’s up 27% in the last 30 days. And two, the flow of news — from launching a new credit card to reporting a solid first quarter to spending $200 million to buy crypto exchange Bitstamp yesterday.

    “This is a strategic move for HOOD to expand its crypto business and we confirm our thesis that HOOD is a great way to seek crypto equity exposure at the start of an exciting new crypto cycle,” Bernstein’s Gautam Sukhani said this morning.

    I had coffee with Robinhood co-founder and CEO Vlad Denev yesterday afternoon after the Bitstamp deal. You can tell the guy’s got his swagger back, but gained a whole new level of experience from doing what he did years ago – from layoffs to witnessing the GameStop (GME) madness. Consider what the firm is doing next in wealth management.

    Below is our last chat on Yahoo Finance Live.

  • Reminder when reading jobs report

    The market still wants to believe in rate cuts for 2024.

    So keep that in mind as you navigate today’s jobs report and plan for how it might affect central bank policy.

    Nice comment from Deutsche Bank’s Jim Reid this morning after the ECB’s interest rate cut yesterday:

    “And while the tone is somewhat dovish in many respects, it is now the fourth G10 central bank to cut interest rates after Canada, Sweden and Switzerland. In turn, the move has confirmed the notion of a global monetary policy cycle. When central banks quickly raise rates in an effort to reduce inflation, investors Moving towards an easing pattern, with further cuts expected on the horizon.

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