U.S. labor-market data show that recovery slowed in July
U.S. stock indexes traded lower early Friday after the July employment report showed the economy added back slightly more jobs than expected, but at a slower pace than in previous months with the American recovery hamstrung by rising coronavirus cases in many states.
Rising tensions between Beijing and Washington, after an executive order banning transactions with a pair of China-based technology companies, may also provide some grounds for caution.
How are equity benchmarks trading?
The Dow Jones Industrial Average
traded 70 points, or 0.3%, lower at 27,320; the S&P 500 index
were trading 10 points, or 0.3%, down at 3,340; while the Nasdaq Composite Index
retreated 28 points, or 0.3%, at 11,081.
On Thursday, the Dow rose 185.46 points, or 0.7%, to end at 27,386.98; the S&P 500 climbed 21.39 points, or 0.6%, to close at 3,349.16. Both benchmarks booked five straight days of gains, with the Dow ending 7.3% from its all-time closing high set on Feb. 12, while the S&P closed 1.1% from its Feb. 19 closing record. The Nasdaq Composite Index gained 109.67 points, or 1%, finishing at 11,108.07 to book its 32nd record close of the year.
What’s driving the market
Investors are parsing the jobs report, which showed that the U.S. added 1.76 million jobs in July—just one-third of the unexpected 4.8 million gain last month—with the unemployment rate falling to 10.2% from 11.1% in June. Consensus estimates from economists polled by MarketWatch had been for an increase of 1.7 million jobs on the month.
“The July jobs report was better than expected and represents welcome progress on the road to economic recovery,” said David Kelly, Chief Global Strategist, J.P. Morgan Asset Management. “However, employment growth is slowing which underscores the need for further monetary and fiscal stimulus, particularly as the ongoing pandemic continues to cripple large parts of the U.S. economy.”
As of Friday morning, the global tally for confirmed cases of COVID-19 climbed above 19 million on Friday, according to data aggregated by Johns Hopkins University, and the death toll rose to 715,163. The U.S. case tally climbed to 4.9 million and the death toll rose above 160,000, after the U.S. added another 1,000 deaths overnight and counted another 57,000 new cases.
Friday’s nonfarm-payrolls report come as lawmakers in Washington have been haggling over possibly trillions of dollars in aid for out-of-work Americans after a $600 a week unemployment relief benefits expired last month.
However, some investors say that the data also raise serious questions about a V-shaped, or sharp and quick, economic recovery that Wall Street has wagered on thus far.
“There is more focus on whether the stall in mobility data in July is signaling an August stall in the job market,” wrote David Donabedian, chief investment officer of CIBC Private Wealth Management, in an emailed note. “Also, there is lingering concern that the fiscal package talks in DC are gridlocked, and news that the economy continues to add jobs may reduce the sense of urgency to get a deal done,” he wrote.
President Donald Trump on Thursday told reporters that he could sign an executive order to provide fresh aid to the jobless but it appears presidential powers are limited in what if any action can be taken to provide fresh funds without Congressional approval.
Meanwhile, President Donald Trump signed an executive orders late Thursday that bars transactions with the parent companies of Chinese social media companies TikTok and Tencent
as the president attempts to force an acquisition by mid September of TikTok’s U.S. arm in the coming 45 days. In response, TikTok, which is owned by China-based ByteDance, has threatened to sue the president, reflecting rising Sino-American tensions.
In other economic reports, investors will watch for a read of wholesale trade at 10 a.m. and a report on consumer credit at 3 p.m.
Which stocks are in focus?
- Uber Technologies
posted another quarterly loss of more than $1 billion Thursday as the COVID-19 crisis took a toll on its core ride-hailing business, which was actually surpassed by Uber’s food-delivery business.
- Shares of Rocket Cos.
the parent of major mortgage lender Quicken Loans, is in focus after it gained over 20% after initially falling flat following its initial public offering on Thursday.
- Shares of Biogen
were in focus after the company said the Food and Drug Administration had accepted the application for the company’s investigational, and somewhat controversial, Alzheimer’s disease treatment.
- Shares of Pfizer Inc.
gained on Friday after it announced that it will help manufacture Gilead Sciences Inc.’s GILD, -0.27% COVID-19 treatment remdesivir as part of a multiyear agreement.
- Dish Network Corp. shares
jumped Friday, after the satellite TV company beat second-quarter earnings estimates.
How did other markets trade?
The 10-year Treasury note yield
was little changed at 0.535% after the jobs report. Bond prices move inversely to yields.
The greenback pared some of its gains after the nonfarm-payrolls data, with the ICE U.S. Dollar index
rising 0.3% at 93.016.
oil headed down 1.1% to trade at $41.51 a barrel on the New York Mercantile Exchange. Gold futures for December
aimed for a sixth consecutive day of gains and were up $4.70, or 0.3%, at $2,074.10 an ounce, down less than 0.1%.