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

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US stock futures held near all-time highs on Friday as investors weighed the June jobs report, which will play into the Federal Reserve’s rate cut calculations.

S&P 500 futures ( ES=F ) were little changed at the end of the report, after hitting a record close in a shortened session on Wednesday. Dow Jones Industrial Average (YM=F) futures and tech-heavy Nasdaq 100 (NQ=F) futures were also flat. All three gauges were closed Thursday for the Fourth of July holiday.

The US economy added 206,000 jobs in June, more than the 190,000 expected, but the unemployment rate rose unexpectedly to 4.1%, its highest level since November 2021, in another sign that the labor market continues to cool.

Signs of looser conditions in jobs data earlier this week reinforced the idea that inflation will continue to cool, setting the stage for the Fed to cut interest rates from their current two-decade high. Traders are now pricing in a nearly 75% chance of a September cut, according to CME’s FedWatch tool.

Investors are weighing on Friday’s jobs data to decide whether the slowdown in monthly job growth reflects a normalization in the labor market as it shakes out from the pandemic, or marks the early signs of a broader economic slowdown.

Elsewhere, the Labor Party’s landslide victory in the UK election caught the attention of investors monitoring political risk, especially as the US presidential election approaches. With some major donors calling for President Joe Biden to step down, eyes are on Donald Trump’s growing lead in the polls and what that could mean for the markets.

Buoyed by the AI ​​boom, Samsung Electronics ( 005930.KS ) quarterly profit rose to 15 times a year earlier, lifting the stock to a three-year high.

On the corporate front, crypto-related stocks Coinbase Global ( COIN ) and Marathon Digital ( MARA ) lost about 6% in premarket trading as bitcoin (BTC-USD) fell to its lowest level against the dollar since February.

LIVE2 updates

  • Pressure is mounting for the Fed to act

    There’s no doubt what the story will be coming out of Friday’s jobs report — the Federal Reserve is in danger of ending up behind the curve.

    It means the central bank could end up cutting rates too late, just as many believe it was too slow to raise interest rates in 2022.

    With the unemployment rate now at its highest level since November 2021, other data such as the increase in persistent jobless claims and the decline in job openings are beginning to look like they have sent a clear signal that the countries’ main gains of labor have overestimated the strength of the labor market.

    Inflation data continue to slow toward the Fed’s 2% target, although in the early months of the year that progress appeared to have stalled.

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

    Neil Dutta at Renaissance Macro, who has become the leading voice on Wall Street saying the Fed should be more forceful this fall in cutting rates, wrote in a note just minutes after Friday’s report dismissed that, “The report today’s employment should strengthen expectations for a September rate cut, economic conditions are cooling and that makes the tradeoffs different for the Fed.

    According to Dutta, the Fed’s July meeting should set the stage for a September rate cut.

  • Job gains are subdued, but unemployment rate rises to highest level since 2021

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

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

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

    Stock futures returned higher after the report, adding to gains after the market traded at record highs earlier this week amid a flurry of softer-than-expected economic data, including readings on inflation that lead the US back down a “disinflationary path”. According to the chairman of the Federal Reserve, Jerome Powell.

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