Stocks were mixed in a volatile trading session on Friday after a better-than-expected July jobs report as investors gauged what a strong labor market could mean for the Federal Reserve’s rate-tightening campaign.
The Dow Jones Industrial Average added just 8 points, recovering from a 200-point loss in the previous session. The S&P 500 fell 0.35% and the Nasdaq Composite fell 0.62%. Losses were offset by banking stocks, which rose on hopes that interest rate hikes will continue at a firm clip. Energy stocks also rose, but technology companies fell.
The labor market added 528,000 jobs in July. Easily The Dow Jones beat the estimate 258,000 increase. The unemployment rate fell to 3.5%, down from an estimate of 3.6%. Wage growth also rose more than estimated, at 0.5% month-on-month and 5.2% higher than a year ago, indicating that high inflation is still a problem.
Shares Following the statement opened below, seemed to indicate that the economy was not currently in recession. Job growth was expected to slow as the central bank continues to raise interest rates to control inflation, but the report shows the labor market is still running hot. That means the central bank may act more aggressively at its next meeting.
“Anyone who jumps at ‘the Fed is going to go ahead and start cutting rates next year’ should get off at the next station because that’s not in the cards,” said Art Hogan, chief market strategist at P. Riley Financial. is clear.”
The report is important because it is one of two the central bank will look at before deciding how much to raise rates at its September meeting. The Fed will have another jobs report and two consumer price index numbers before making its next rate decision.
The major averages posted their best month since 2020 in July on hopes that the Fed will slow its pace of hikes. The S&P 500 added 9.1% last month.