Live updates: The latest on markets and the lower-than-expected job numbers | CNN Business

The latest on markets and the lower-than-expected job numbers

exp U.S. Fed holds rates | FST 061509ASEG1 | CNNI BUSINESS_00005820.png
Federal Reserve leaves rates on hold
01:19 - Source: CNN

What we covered here

  • Markets ended the day lower on Friday after the latest jobs report from the Labor Department.
  • The US economy added 209,000 jobs last month, and the unemployment rate ticked down to 3.6% from 3.7%, the US Bureau of Labor Statistics reported.
  • June’s total was lower than May’s unexpectedly strong showing of 306,000 jobs, and below economists’ expectations for a net gain of 225,000 jobs. It was the lowest monthly gain since a decline in December 2020. 
  • Attention now turns to two key inflation reports next week and then the Federal Reserve’s policy meeting on July 25-26, when it is expected to announce another quarter-point rate hike in its attempt to slow the economy.
26 Posts

Stocks fall for the day and week as investors digest mixed labor data

Traders work on the floor of the New York Stock Exchange on July 7. 

Stocks slid Friday and fell for the week, as a slate of mixed jobs data raised concerns that the Federal Reserve will hike interest rates for longer than expected.

The Dow fell roughly 2% for the week, marking its biggest weekly decline since March. The S&P 500 declined 1.2% and the Nasdaq Composite slipped 0.9%.

Stocks saw most of their declines on Thursday, after payroll processor ADP’s latest National Employment Report revealed that US private sector businesses added a significantly higher number of jobs than expected last month.

While the June jobs report showed a cooldown in hiring, average hourly earnings growth held steady and the unemployment rate edged down, indicating that the labor market still remains hot.

Traders remained firm in their expectations that the Fed will raise rates at its next meeting. The CME FedWatch Tool shows a roughly 92% chance that the central bank will hike rates by a quarter point.

The Fed’s next meeting takes place July 25 - 26. Before then, the central bank will parse through the Consumer Price Index and Producer Price Index reports for June that are both due next week.

Meanwhile, Rivian shares jumped 14.2% after Wedbush raised its price target for the electric car maker to $30 from $25.

JetBlue Airways shares continued to gain, adding 3.1% on Friday after the company said Wednesday it is terminating its American Airlines partnership to prioritize its purchase of Spirit Airlines.

Bank stocks that were hammered on Thursday rallied. The SPDR S&P Regional Banking ETF rose about 2.4%. JPMorgan Chase shares added 0.8%.

The Dow fell 187 points, or 0.6%.

The S&P 500 slipped 0.3%.

The Nasdaq Composite slid 0.1%.

As stocks settle after the trading day, levels might change slightly.

Stocks remain muted as investors parse June jobs report

Stocks were mixed late Friday afternoon as investors continued to digest June’s mixed jobs report.

The Dow turned negative, dipping 28 points, or 0.08%. The S&P 500 rose 0.3% and the Nasdaq Composite added 0.5%. All three major indexes are on track to lose for the week.

Investors are looking to two key inflation readings, the Consumer Price Index and Producer Price Index reports, for more insight into the Federal Reserve’s interest rate trajectory.

Also due next week are housing starts data for June and the University of Michigan’s first reading of consumer sentiment for July.

Is this what a soft landing looks like?

June’s job gains may seem paltry by pandemic-era standards — especially since the monthly report has been pumping out totals north of 500,000 jobs — but the labor market remains historically strong.

While inflation is slowly retreating from the scorching highs hit this time last year, unemployment is staying well below 4% despite 10 consecutive interest rate hikes from the Federal Reserve.

“With these [209,000 monthly job] gains, which are strong but albeit moderating, it’s beginning to look like the Fed may achieve its soft landing,” said Joe Brusuelas, chief economist for RSM US.

To stick a soft landing, the Fed is hoping to raise interest rates enough to bring down inflation without triggering a recession (and high unemployment) in the process.

It’s been nearly 30 years since the Fed last executed one, and it’s not out of the question this time around, even with another potential hike on the table, economists say.

“The job growth is slowing, but I don’t actually think that’s necessarily a bad thing,” Rucha Vankudre, senior economist for labor market analytics company Lightcast, told CNN. “In some ways this is great. We’re continuing to see the soft landing that we’re hoping for.”

How the Fed views the labor market

The Marriner S. Eccles Federal Reserve Board Building is seen on September 19, 2022 in Washington, DC

The Federal Reserve wants to see the labor market slow down broadly, bringing it into “better balance,” as Fed Chair Jerome Powell has frequently described it.

That means wage growth would need to cool consistently, monthly payroll growth would need to be close to a range of 70,000 and 100,000 — the smallest job gain needed to keep up with population growth — and unemployment would need to rise, according to economists. Job market conditions don’t resemble that just yet.

“This is clearly a very tight labor market, so I expect the Fed to look at this data and say there is justification here for continued small rate increases because the labor market is not cooling enough,” Dave Gilbertson, labor economist at payroll software company UKG, told CNN.

Labor costs are higher because of a persistent difficulty in hiring, weighing on labor-intensive service providers such as hospitals and restaurants, which has put upward pressure on consumer prices since businesses typically raise wages to address hiring challenges.

There has been some progress on bringing the job market back into better balance while inflation has come down. Job openings fell to 9.82 million in May, down from a peak of 12 million in March 2022, though they still greatly exceed the number of unemployed people seeking work.

The June jobs report doesn't change anything for the Fed

An interest rate hike in July seems all but certain after the June jobs report.

Job gains remain robust, wage growth is still going strong, and unemployment continues to hover near historic lows. That means the job market is still fueling demand in the economy, which the Federal Reserve has been trying to slow through rate hikes. And Fed officials have made it clear they think the central bank still has more work to do to bring down inflation which is still running well above the 2% goal.

Federal Reserve Bank of Chicago President Austan Goolsbee, a voting member of the Fed committee that decides interest rates, said in an interview Friday that he sees “a decent chance of further tightening down the pipeline” and that inflation “needs to come down more.”

Other Fed officials have struck a similarly hawkish tone on inflation, hinting strongly at a hike in July.

Stocks move higher in afternoon trading after jobs data shows a slowdown in hiring

Traders work on the floor of the New York Stock Exchange during morning trading on July 6.

Stocks gained on Friday afternoon after falling initially on June jobs data that showed the labor market has cooled, though wage inflation remains sticky.

The Dow rose 106 points, or 0.3%. The S&P 500 gained 0.6% and the Nasdaq Composite added 0.8%.

The VIX, known as Wall Street’s fear gauge, fell to 14.6. It had jumped to roughly 8% to 15 on Thursday, when hotter-than-expected jobs data from payroll processor ADP spooked investors.

Meanwhile, Rivian shares climbed 16.1% after Wedbush raised its price target for the electric car maker to $30 from $25.

Banking stocks that were hammered on Thursday also rallied. The SPDR S&P Regional Banking ETF rose about 3%. JPMorgan Chase shares added 1.7% and Wells Fargo gained 1.2%.

Where the jobs are

On a percentage basis, education and health services, construction and other services tied for the biggest monthly gains of 0.29%. Meanwhile, mining and logging saw the biggest monthly percentage decline of 0.16%.

Treasury Department: Homeowner relief funds have so far helped 300,000 keep their home

Since March 2021, more than 300,000 homeowners avoided foreclosure and were able to stay in their homes due to the Homeowner Assistance Fund, the Treasury Department said Friday.

The HAF provided $9.961 billion to support homeowners facing financial hardship associated with Covid and was passed as part of the American Rescue Plan.

During the first quarter of this year, HAF programs distributed $1.2 billion in assistance to households, a 50% increase over the fourth quarter of 2022.

“The Homeowner Assistance Fund has helped keep hundreds of thousands of families in their homes,” said Wally Adeyemo, Deputy Secretary of the Treasury. “As state programs assess their remaining HAF funds, the Treasury Department will continue working with recipients to ensure these funds are swiftly delivered to homeowners most in need.”

HAF is a key component of the Biden administration’s efforts to help homeowners remain in their homes, which included a foreclosure moratorium, increased options for mortgage payment forbearance, and enhanced loan modifications to resolve delinquencies.

As many foreclosure protections wound down in early 2022, HAF programs stepped in to provide assistance. The combination of these programs has resulted in historically low foreclosure filings. May foreclosure starts were about 35% below pre-pandemic levels, according to Black Knight.

Funds still remain for homeowners struggling, only 14 states and two U.S. territories have expended over 50% of their HAF program funds. For homeowners struggling to make payments, now that many forbearance programs have expired, information on local programs distributing aid can be found here.

Biden hails June jobs report as "Bidenomics in action"

President Joe Biden speaks during a stop at a solar manufacturing company that's part of his "Bidenomics" rollout on Thursday, July 6 in West Columbia, S.C.

President Joe Biden reacted to the latest jobs report numbers Friday morning, saying that they are evidence of “Bidenomics in action.” 

“We are seeing stable and steady growth. That’s Bidenomics—growing the economy by creating jobs, lowering costs for hardworking families, and making smart investments in America,” Biden said in the statement. 

The US added 209,000 jobs, the Bureau of Labor Statistics reported Friday, a cooler than expected report and the lowest monthly gain since December 2020.

However, with all three major US indexes falling Friday morning, investors are clearly concerned that the cooling of the economy may not be enough to stop the Federal Reserve from once again raising rates.

So what happened to that recession everyone was predicting?

A street sign is displayed before pedestrians on a street in New York on May 26.

“There is no recession out on the horizon,” said Chris Rupkey, chief economist at Fwdbonds.

“We can hold the applause for Fed officials thinking they could take a meeting off, however, as apart from the labor market, everything everywhere in the economy is coming back to life and setting new records.”

Capital goods orders, home prices, home sales and consumer confidence are all rebounding, Rupkey said. There is also strengthening demand for cars and light trucks.

“It all tells the Fed they aren’t done yet if they are hoping their rate hikes would cool economic demand and lessen the upward pressure on wages. The less-than-expected jobs data won’t scuttle the Fed’s plans for a rate hike on July 26. Bet on it.”

Wage growth didn't change last month

Friday’s report showed that average hourly earnings growth was unchanged at 0.4% from the month before and also unchanged at 4.4% year-over-year. 

Federal Reserve officials have been hoping their aggressive rate-hiking campaign would bring about a slowdown in the job market, and especially in wage gains, which are viewed as a contributor to inflation.

“The Fed would probably like to see [wage growth] come down a little more,” Rucha Vankudre, senior economist for labor market analytics company Lightcast, told CNN. “But it’s so much better than we were a year ago or even in the past six months.”

Stocks fall after cooler-than-expected jobs data

Stocks fell Friday as investors worried that a cooler-than-expected jobs report still isn’t enough to keep the Federal Reserve from continuing to raise interest rates.

All three major indexes are on pace to lose for the week.

The US labor market added just 209,000 jobs, the Bureau of Labor Statistics reported Friday. That’s the lowest monthly gain since a decline in December 2020.

But the unemployment rate ticked down to 3.6% from 3.7%. Average hourly earnings rose 0.4%, unchanged from the previous month, suggesting that wage inflation, a major headwind for the Fed in its fight to stabilize prices, remains persistent.

That comes after US private sector businesses added an estimated 497,000 jobs in June, according to payroll processor ADP’s latest National Employment Report, released Thursday.

“Today’s data coupled with the blowout ADP earlier in the week probably locks in the Fed’s case for more tightening,” said Clayton Allison, portfolio manager at Prime Capital Investment Advisors.

Traders see a 95% chance the Fed will hike rates by a quarter point in July, according to the CME FedWatch Tool.

Meanwhile, shares of Levi Strauss fell 7.5% after the apparel company cut its full-year profit guidance on Thursday after the close.

Meta shares continued to gain on Friday, adding 0.1%, after it said that Threads, its new social platform, had received 30 million signups.

The Dow fell 96 points, or 0.3%.

The S&P 500 slipped 0.3%.

The Nasdaq Composite slid 0.1%.

The unemployment rate for Black and Hispanic workers rose sharply in June

The unemployment rates for Black and Hispanic workers rose last month after recently touching record lows. The jobless rate for Black Americans rose to 6% in June from 5.6% the prior month. For Hispanics, it ticked up to 4.3% from 4% during the same period.

The still-tight labor market has delivered some welcome gains for racial minorities through employment and wages. The Black unemployment rate reached an all-time low in May, narrowing the gap with the unemployment rate for white workers and the Hispanic jobless rate reached a record low last September. Black and Hispanic workers have also enjoyed robust wage gains.

But racial disparities persist and they could worsen as the Fed continues to raise interest rates this year. Officials expect two more quarter-point hikes in 2023.

The economy is still facing a number of headwinds such as the resumption of student loan payments, tougher lending standards, lingering bank stresses and the additional rate hikes. As the economy slows, any recent progress in economic racial disparities might be undone.

Stock traders breathe a sigh of relief after job gains cool off

Traders work on the floor of the New York Stock Exchange during morning trading on July 6.

After months and months of stronger-than-expected US jobs data, labor market gains cooled off a bit in June. “Finally!” you could almost hear Wall Street traders exult.

Markets took a bit of a tumble Thursday after private payroll processor ADP reported a stunningly high number of job gains last month. The report historically has not been great at predicting the government’s report, but it was still enough to send the Dow sinking 366 points Thursday.

The Federal Reserve has been trying to cool inflation for more than a year by jacking up interest rates. That should, in theory, cool off the job market. But a number of unique factors, including a historic labor shortage, have insulated the labor market from the Fed’s machinations.

The strong job market has also given the Fed runway to continue to hike rates without worrying too much about plunging the economy into a recession. But stock traders don’t like interest rate hikes, because they hurt companies’ bottom lines, pressuring profit and weighing on share value.

Stock futures weren’t exuberant Friday — after all, the United States added a healthy 209,000 jobs last month — but they largely held steady.

Dow futures were down 80 points, or 0.2%

S&P 500 futures fell 0.2%

Nasdaq futures were flat.

There are more women in the workforce than ever before

An attendee fills out job applications at a Novant Health Career Fair at NC Works in Wilmington, North Carolina, on April 20.

The labor force participation rate for women in their prime working age hit an all-time high in June, reaching 77.8%.

The participation rate for women between 25 and 54 years old hit a record high in April and then again in May, rebounding from the pandemic “she-cession” and returning to its pre-pandemic form of making progressively historic labor market gains.

In the years leading up to the Covid-19 pandemic, women’s labor force participation rates were rising faster than that of their male counterparts, Bureau of Labor Statistics data shows.

A confluence of several factors were behind those gains, notably: Female-dominated industries, such as health care and caregiving, were among the fastest-growing industries; educational attainment for women rose substantially; and women also made greater inroads into traditionally male-dominated fields such as construction, agriculture, and repair and maintenance.

By February of 2020, the labor force participation rate for prime working-age women was 77% — just shy of the record 77.3% set during the dot-com era, BLS data shows.

But by April 2020, that rate plummeted to 73.5% as the pandemic froze the US economy, forcing more than 20 million people out of their jobs. As the nation recovered in the coming months, however, women didn’t return at the same levels as men.

The pandemic walloped the leisure and hospitality and education and health services sectors, where women make up the majority of the workforce. Additionally, job losses and a lackluster employment recovery in the child care sector hampered workers’ ability to return to the labor market; and since caregiving responsibilities often fall to women, they were held back more as school became home-based.

The tide eventually turned.

Here's how the job market looks over the past 12 months

Where the Fed goes from here

The Federal Reserve would likely need to see monthly job gains of around 100,000 in order to hit pause again on its aggressive rate-hiking campaign, economists say.

While a quarter-point hike is expected at the Fed’s next monetary policy meeting later this month, the September meeting is still a wild card. Officials will have another two job reports to parse through by then, and several pieces of crucial data on inflation.

There is “nothing” in today’s employment report that changes expectations that the Fed has more work to do, said Joseph Davis, global chief economist at Vanguard, in a note Friday.

“Wage growth ticked up and remains well above levels the Fed would be comfortable with in their efforts to bring inflation back to 2%. Still strong growth in construction speaks to the lingering under supply in the housing market and the likelihood that the likely turning point in the business cycle will be different than those in the past.”

The Fed will likely see this report as “largely consistent with its previous view of the job market and the economy,” said Mark Hamrick, senior economic analyst at Bankrate.

June's job total "strikes the right balance"

Job seekers speak with recruiters during a job fair at Navy Pier on April 11 in Chicago, Illinois. 

“There is no cause for alarm over this decrease,” said Dave Gilbertson, labor economist at UKG.

“Summer hiring started earlier than usual this year, and as a result we saw a remarkable level of growth reflected in May’s report,” he said in a note Friday. “Fundamentally, I’m not seeing any cracks in the foundation of the labor market. In fact, UKG’s workforce activity data — as a more real-time gauge of what’s happening in the labor market — shows more strength and resilience than today’s jobs report might suggest. We continue to see the most consistent gains since the fall of 2021.” 

However, good news for job creation can mean bad news for inflation, Gilbertson said.

“The level of job creation we saw in June strikes the right balance. That said, we should be prepared for this jack-in-the-box labor market to continue for the foreseeable future.” 

The US economy added 209,000 jobs in June

A "Now Hiring" sign at Jamba Juice in San Francisco, California, on June 26.

The US job market cooled off in June, adding just 209,000 jobs, the Bureau of Labor Statistics reported Friday.

June’s total was lower than May’s unexpectedly strong showing of 306,000, and below economists’ expectations for a net gain of 225,000 jobs.

It’s the lowest monthly gain since a decline in December 2020. 

The unemployment rate fell to 3.6% from 3.7% the month before, according to the report.

US employers have now added jobs for 30 consecutive months.

While the Federal Reserve has tried to cool the economy with 10 consecutive rate hikes, the labor market remains impervious to those efforts.

Wall Street holds its breath ahead of key jobs data

People walk passed the New York Stock Exchange on Wall Street on May 26.

US stocks were muted Friday morning ahead of the closely watched monthly jobs report from the Labor Department.

Traders are bracing themselves for another upside surprise, just one day after private payroll processor ADP revealed a massive, unexpected spike in hiring activity in June.

While the Federal Reserve has rolled out an unparalleled and aggressive 10 consecutive rate hikes in its attempt to cool off the economy and bring down inflation, the labor market has continued to grow, adding 1.57 million jobs so far this year.

That’s the 10th highest January-to-May total in records that go back to 1939, according to data from the Bureau of Labor Statistics.

Dow futures were down 5 points ahead of the morning trading session. S&P 500 futures hovered around 0.06% lower, and Nasdaq futures were down 0.2%.