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Stock prices sway as employment figures beat expectations

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U.S. stocks were roaring on Friday after a jobs report seen as a key driver of interest rate cut hopes showed much stronger job growth than expected.

The S&P 500 (^GSPC) rose 0.2% and the Dow Jones Industrial Average (^DJI) added 0.3%, after the three major indexes all snapped weakness on Thursday. The tech-heavy Nasdaq Composite Index (^IXIC) remained lower, trading just below its flat line.

Investors have been boosting stocks on hopes that further data will suggest the economy is cooling, but the Labor Department report offered further evidence that parts of the economy are too hot for the central bank’s inflation-fighting measures, bolstering views of keeping interest rates high for longer.

The highly anticipated May employment report reinforced the view that interest rates will probably have to wait until the fall before they are cut from their highest levels in 20 years.

The U.S. economy added 272,000 jobs in May, well above expectations, but the unemployment rate rose slightly to 4.0%.

read more: How does the labor market affect inflation?

Elsewhere in the market, investors are also bracing for an apparently promised livestream from GameStop (GME) promoter Keith Gill, aka “Roaring Kitty.” The event, scheduled for noon ET on Friday, will mark Gill’s first live YouTube appearance since fueling the meme stock’s rally three years ago.

GameStop shares closed 47% higher on Thursday but then plummeted after the video game retailer said it would sell up to 75 million shares and reported a drop in first-quarter sales.

Also looming after the market close is the completion of Nvidia’s (NVDA) 10-for-1 stock split. A midweek rally had briefly boosted the AI ​​chipmaker’s market cap to $3 trillion, but short selling has piled up and the stock has lost steam.

live6 Updates

  • GameStop Investors Prepare for Roaring Kitty Livestream

    GameStop shares fell more than 18% on Friday, just minutes before a highly anticipated live stream by “Roaring Kitty,” the alias used by bullish retail investor Keith Gill.

    Gill’s YouTube account is scheduled to broadcast a livestream at noon ET following the video game retailer’s announcement of quarterly earnings that fell short of analysts’ expectations and news of the stock sale.

    According to a report from Yahoo Finance’s Ines Ferre, GameStop has filed to sell up to 75 million more shares, following last month’s sale of 45 million shares, raising about $930 million in proceeds.

    The announcement came on the heels of shares soaring 47% the day before “Roaring Kitty” was scheduled to appear live on YouTube. Friday’s event marks the investor’s first live appearance on the channel since fueling a 2021 meme stock rally with bullish videos and posts about the video game retailer.

    Gills’ actions and words could be another catalyst for this stock and others in the meme stock basket.

    Earlier this week, an account linked to Mr. Gill revealed that it had bet $175 million on GameStop Corp. Shares soared following the post.

  • Employment reports are a Rorschach test of mixed interpretations

    The U.S. labor market added more jobs than expected in May, but the data also contained what Comerica Bank chief economist Bill Adams called a “Rorschach test” that favored both optimists and pessimists.

    The labor market added 272,000 nonfarm payroll jobs in May, well above the 180,000 expected, according to Bureau of Labor Statistics data released Friday.

    However, the unemployment rate rose to 4% from 3.9% the previous month.

    “Those optimistic about the growth outlook will view the robust payrolls increase as a sign that the economic expansion is continuing unabated,” Adams said in a Friday note. “Pessimists will note that the unemployment rate rose to its highest level since the beginning of 2022, part-time employment increased, and temporary employment, which is often a leading indicator of overall job market weakness, declined.”

    There are also a variety of interpretations available as to how market observers will interpret the latest employment data to affect interest rate outlooks.

    “Most Fed policymakers will likely view May’s payroll gains and rising earnings as a sign that no immediate rate cuts are needed,” Adams said, though he added that the Fed also likely sees the rise in unemployment over the past year as a sign that inflation is headed for further moderation.

    “If core inflation continues to moderate in the coming months, the Fed may decide it is comfortable to begin cutting interest rates by a quarter of a percentage point at its September meeting.”

  • Stocks rise in morning trading

    Below are some of the stocks that led Yahoo Finance’s trending ticker page during morning trading on Friday.

    GameStop (global): Shares of the video game retailer and meme stock giant fell 19% Friday morning after the company reported quarterly earnings that fell short of analysts’ expectations and announced a stock sale just hours before a highly anticipated livestream by “Roaring Kitty,” an alias used by bullish individual investor Keith Gill in the past.

    DocuSign (documentary) The software company, which specializes in electronic contracting, saw its shares fall 8% after it gave out a second-quarter revenue outlook that fell short of Wall Street expectations, but investors ignored more positive announcements after the company beat profit expectations and increased its share-buyback program to 1 billion outstanding common shares.

    lift(lift): Shares of the ride-sharing company rose 3% on Friday morning after the company raised its growth forecast and reaffirmed its guidance for the second quarter. Lyft now expects bookings to grow about 15% over the next three years.

    Vail Resorts (MT-N) The mountain resort fell 13% after the company missed profit expectations and lowered its full-year EBITDA outlook, with CEO Kirsten Lynch citing lift-ticket sales not recovering for the spring season as the reason for the cut.

  • Stock prices fall as interest rate cut expectations fall

    Better-than-expected May jobs data dealt another blow to expectations that the Federal Reserve will soon cut interest rates, as the latest data provided a new signal that contradicted earlier signs of an economic slowdown.

    The S&P 500 (^GSPC) fell 0.3%, while the Dow Jones Industrial Average (^DJI) dropped 0.2%. The tech-heavy Nasdaq Composite Index (^IXIC) lost about 0.4% after the three major indexes all performed poorly on Thursday.

  • Focus on Robinhood

    Robinhood (HOOD) has maintained some impressive streaks.

    First, the stock is up 27% over the past 30 days, and second, the news flow — from the launch of a new credit card to a strong first quarter report to yesterday’s $200 million acquisition of cryptocurrency exchange Bitstamp.

    “We believe this is a strategic move by HOOD to expand its crypto business and supports our thesis that HOOD is the best vehicle for seeking exposure to crypto equities at the start of an exciting new crypto cycle,” Bernstein’s Gautam Chugani said this morning.

    I had coffee with Robinhood co-founder and CEO Vlad Tenev yesterday afternoon after trading Bitstamp. He came away feeling confident but with a whole new level of experience, from the layoffs he experienced a few years ago to his testimony on the GameStop (GME) madness. Keep an eye out for the company’s next move in asset management.

    Below is our final chat from Yahoo Finance Live.

  • Important points to note when reading the employment report

    The market still seems keen to believe in a rate cut in 2024.

    So keep that in mind as you read today’s jobs report and consider how it might affect Fed policy.

    Following the ECB’s rate cut yesterday, Deutsche Bank’s Jim Reid made a good point this morning.

    “And while the tone was somewhat more hawkish in some respects, it became the fourth G10 central bank to cut rates, following Canada, Sweden and Switzerland. The move cements the idea that the global monetary policy cycle is moving toward easing mode, with investors expecting further rate cuts. It therefore marks a major shift from much of the past few years, when central banks were rapidly hiking rates to tame inflation.”



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