S&P 500 futures hold near record as jobs data lands

Live2 updates

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  Fri, July 5, 2024 at 8:59 AM EDT

  Pressure builds for the Fed to act

  There’s no question what the story to emerge from Friday’s jobs report will be — the Federal Reserve is risking ending up behind the curve.

  Meaning the central bank may end up cutting rates too late, just as many believe it was too slow to raise interest rates back in 2022.

  With the unemployment rate now at its highest level since November 2021, other data like a rise in continuing jobless claims and a drop in job openings start to look like they’ve been sending a clear signal that headline job gains have overstated the strength of the labor market.

  Inflation data continues to slow towards the Fed’s 2% target, though in the first few months of the year that progress appeared to stall.

  The Powell Fed’s sensitivity to inflation data running above its target after the 40-year high in price increases we saw back in 2022 has been the predominant feature of this policy regime. But the labor market is starting to speak louder and more clearly: things are getting challenging for more workers.

  Neil Dutta at Renaissance Macro, who has become the leading voice on Wall Street saying the Fed needs to be more forceful this fall in cutting rates, wrote in a note just minutes after Friday’s report dropped that, “Today’s employment report ought to firm up expectations of a September rate cut. Economic conditions are cooling and that makes the trade-offs different for the Fed.”

  In Dutta’s view, the Fed’s July meeting should set the table for a September cut.

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  Fri, July 5, 2024 at 8:54 AM EDT

  Job gains beat, but unemployment rate rises to highest since 2021

  The US labor market added more jobs than expected in June while the unemployment rate unexpectedly rose, reaching its highest level since November 2021 in another sign the job market continues to cool.

  Data from the Bureau of Labor Statistics released Friday showed the US economy market added 206,000 nonfarm payroll jobs in June, more than the 190,000 expected by economists.

  The unemployment rate rose to 4.1%, up from 4% in the month prior and the highest reading in almost three years. June’s job additions were a slight decline from May, which saw job gains revised down on Friday to 218,000 from the 272,000 initially reported last month.

  Stock futures turned higher following the report, adding to gains after the market traded to record highs earlier this week amid a slew of softer-than-expected economic data, including readings on inflation that have the US pacing back toward a “disinflationary path,” according to Federal Reserve Chair Jerome Powell.