Stock Futures Rise After Higher June Payroll Estimates
Shares rose on Friday as investors digested a key impression about the recovery in the US labor market, which indicated a faster-than-expected pace of payroll gains.
The S&P 500 edged higher and set a new high, starting the first sessions of the third quarter on a high note. The Nasdaq also hit an all-time high and the Dow gained. Tesla (TSLA) shares reversed earlier losses to rise after the electric carmaker’s second quarter deliveries hit a new record high, but still missed analyst estimates, based on Bloomberg consensus data .
Investors took into account the June employment report from the United States Department of Labor, the focal point of economic data released this week. The print showed stronger-than-expected acceleration in hiring, with the non-farm workforce up 850,000 for a sixth consecutive monthly gain. The unemployment rate, however, unexpectedly edged up to 5.9%.
“This is the ‘Goldilocks report’ that the market was looking for today. Here you had a nice impression of 850,000 jobs added, the wage pressure remaining – I wouldn’t necessarily call them contained – but surprising here at the down from consensus estimates. So that tells us right now that economic growth continues to accelerate here, that the labor market continues to recover, ”Emily Roland, co-chief strategist, told Yahoo Finance investments at John Hancock Investment Management. “We’re making progress here compared to what the Fed decided to do, which is to bring down unemployment, they’re going to let inflation go up a bit here . Not too hot, not too cold – that’s exactly what the market wants. ”
Ahead of the report, stocks were supported by a slew of strong economic data earlier this week, particularly in the labor market. Private payrolls grew by 692,000 better than expected in June, according to ADP, and initial weekly jobless claims improved more than expected to the lowest level since March 2020. Still, other reports pointed out the ever-prevalent labor supply issues plaguing businesses across industries, with scarcity capping what has otherwise been a robust economic rebound.
“It’s really the labor market supply that’s holding back hiring right now,” Luke Tilley, chief economist at Wilmington Trust, told Yahoo Finance. “But we’re pretty bullish, the market is pretty bullish, and we think that’s a big part of what is driving these indices up.”
Friday’s jobs report will also give markets a suggestion as to the timing of the Federal Reserve’s next monetary policy move. For now, the Fed has kept its two key policies in place during times of crisis, or quantitative easing and a benchmark interest rate close to zero. However, a particularly strong jobs report and a faster-than-expected impression of wage growth could justify an earlier-than-expected change by the central bank.
“For the first time in years, I’m actually worried about a number that’s too hot causing some sort of volatility or pullback in stocks. That’s because the Fed signaled it was looking to cut quantitative easing, ”Tom Essaye, founder of Sevens Report Research, told Yahoo Finance. “And if we get a really, really high number of jobs and a high number of wages, then the markets are going to start saying gee, are they going to cut QE maybe before November, or are they going to cut it more intensely than we are? repo and in a market that has been frankly very calm and a little complacent, that could cause volatility. “
Nonetheless, the Fed has hinted that it will not react recklessly to one-off reports and has given itself leeway to adjust the timing of its monetary policy pivots as new data comes in.
“I think everyone is counting on the Fed to continue for the foreseeable future. So I don’t see any big changes there until 2023”, Octavio Marenzi, CEO and Founder of Opimas, told Yahoo Finance. “And even then the Fed hedged their bets very significantly – they basically said we could hike interest rates twice in 2023, but again we couldn’t. So I think l smart money bet things will continue, they will continue with very accommodating monetary policy. “
11:53 a.m. ET: Lordstown Motors shares tumble after Department of Justice report investigates company
Lordstown Motors (RIDE) shares fell more and more. more than 9% intraday on Friday after the the Wall Street newspaper reported that the Justice Department was surveying the electric truck company. The media quoted anonymous people close to the case.
The investigation would add to an ongoing investigation by the US Security and Exchange Commission, which Lordstown previously revealed to have subpoenaed the company over issues including its descriptions to investors of its trucks preorders.
11:08 am ET: AMC shares tumble after Iceberg Research revealed short position
AMC Entertainment (AMC) shares sank on Friday after financial firm Iceberg Research said in a Twitter post that he had taken a short position in the theater company. AMC has recently received considerable attention from retail traders after being popularized on the Reddit Wall Street Bets forum.
“The fundamentals are obvious,” Iceberg Research said in an article. “After a month of sideways trading and a lot of money lost in call options, the pump looks increasingly fragile.”
AMC shares were down 12% intraday on Friday. Shares are still up over 2,000% after a Reddit-fueled trading frenzy earlier this year, but have lost 20% in the past month.
9:30 a.m. ET: Stocks gain after June jobs report greatly exceeds estimates
Here’s where the markets were trading right after the opening bell on Friday morning:
S&P 500 (^ GSPC): +12.23 (+ 0.28%) to 4,332.17
Dow (^ DJI): +57.25 (+ 0.17%) to 34,690.78
Nasdaq (^ IXIC): +60.72 (+ 0.42%) to 14,588.15
Gross (CL = F): $ -0.32 (-0.43%) to $ 74.91 per barrel
Gold (CG = F): + $ 17.60 (+0.99%) to $ 1,794.40 per ounce
10-year cash flow (^ TNX): -2.4 bps for a yield of 1.456%
8:47 a.m. ET: Tesla’s second quarter deliveries missed estimates
Tesla (TSLA) shares edged down early in Friday morning after the electric vehicle maker second quarter deliveries came to light in relation to Wall Street’s expectations.
Shipments totaled 201,250 for the April-June quarter, missing expectations of 204,160, according to Bloomberg consensus data. Still, that marked a new quarterly record for vehicle deliveries for the automaker, and was significantly higher than the 90,650 declared for the same quarter of last year.
As has been the case in recent quarters, the bulk of deliveries included Model 3 and Model Y vehicles at 199,360. This topped estimates at 192,920, according to Bloomberg data. Deliveries of the 1890 S and X models were insufficient, however, and were down 82% year-on-year.
Production in the second quarter also increased sharply from last year to 206,431 vehicles from 82,272 in the comparable 2020 quarter. This happened even as Tesla, along with other major automakers, faced global semiconductor supply constraints.
“Our teams have done an outstanding job navigating through global supply chain and logistics challenges,” Tesla said in a press release.
8:43 a.m. ET: June payroll gains exceed expectations as economy creates 850,000 jobs
The non-farm payroll increased more than expected in June, reflecting an acceleration in job creation as the economic recovery gathered pace.
The wage bill increased by 850,000 in June against 720,000 expected, the Labor Department announced Friday morning. Friday’s jobs report also came with revisions to payroll figures for the past two months. In April, non-farm wage additions were revised down from 9,000 to 269,000, while those for May were revised up from 24,000 to 583,000.
However, the unemployment rate unexpectedly rose to 5.9% from 5.8% posted in May. It also coincided with an unchanged reading of the labor force participation rate, which stagnated at 61.6% from May and is still depressed from pre-pandemic levels.
7:16 a.m. ET Friday: Stock futures gain as investors await jobs report
Here’s where the markets were trading ahead of the opening bell on Friday morning:
S&P 500 Futures Contracts (ES = F): 4,314.25, +3.5 points (+ 0.08%)
Dow Futures (YM = F): 34,529.00, +15 points (+ 0.04%)
Nasdaq Futures (NQ = F): 14,580.25, +31.75 points (+ 0.22%)
Gross (CL = F): $ -0.10 (-0.13%) to $ 75.13 per barrel
Gold (CG = F): + $ 11.10 (+ 0.62%) to $ 1,787.90 per ounce
10-year cash flow (^ TNX): -3.6 bps for a yield of 1.444%
6:15 p.m. ET Thursday: Stock futures drop ahead of June jobs report
Here’s where the markets were trading in Thursday’s overnight session:
S&P 500 Futures Contracts (ES = F): 4,309.25, -1.5 point (-0.03%)
Dow Futures (YM = F): 34,509.00, -5 points (-0.01%)
Nasdaq Futures (NQ = F): 14,538.25, -10.25 points (-0.07%)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck