NEW YORK (AP) — U.S. stocks were on track to hit more records on Friday after a long-awaited jobs market report bolstered Wall Street hopes that interest rates will soon ease.
The S&P 500 was up 0.3% in midday trading, on track to hit a new all-time high for a third straight day following Thursday’s trading hiatus for the Independence Day holiday. The Dow Jones Industrial Average was roughly flat as of 12:10 pm ET, and the Nasdaq Composite was up 0.7% to a record high.
In the bond market, the move was more decisive. Treasury yields fell following a mixed U.S. employment report. Companies hired more workers last month than economists expected, but the job gains still slowed from May’s. Moreover, the unemployment rate unexpectedly rose and the U.S. government said last month’s employment numbers were lower than previously indicated.
Overall, the data reinforced Wall Street’s view that U.S. economic growth is slowing under the weight of high interest rates — just what investors are hoping would tame inflation and encourage the Federal Reserve to start cutting its key interest rate from its highest level in two decades.
The question is whether the Fed can time its next move precisely: cut rates early enough to keep the slowdown from tipping into a recession, but not so far that inflation regains momentum and rises again.
The clearest takeaway from the jobs report for financial markets is that the Fed is maintaining its outlook for a cut in its key interest rate later this year, possibly as soon as September. The yield on the two-year Treasury note, which tracks closely with expectations of Fed action, fell to 4.61% from 4.71% late Wednesday.
The yield on the 10-year Treasury note, the backbone of the bond market, fell to 4.28% at Wednesday’s close, down from 4.36% and 4.70% in April, a notable move for the bond market and one that has supported stock prices.
Friday’s jobs report follows a wave of data pointing to a slowdown in the overall U.S. economy. Reports earlier this week showed business activity in both the U.S. service and manufacturing sectors contracted last month, weaker than economists expected. They also showed how lower-income American shoppers are still struggling to keep up with rising prices as credit card debt balances soar.
“The big question for long-term investors is whether the recession fears come true,” said Brian Jacobsen, chief economist at Annex Wealth Management. “We think a recession is unlikely this year or next, but that doesn’t mean the market doesn’t fear one.”
On Wall Street, gold miner Newmont rose 1.9%, the biggest gainer in the S&P 500 index. The company benefited from a small increase in the price of gold. Gold typically benefits from lower interest rates because higher-yielding bonds can lure investors away from gold, which doesn’t provide any benefits to its holders.
Gains in some big, influential stocks also helped support the market, despite declines across most of the S&P 500. Meta Platforms rose 4.5% and Apple added 1.7%.
Amazon rose 1.4% after Saks Fifth Avenue’s parent company announced a deal to buy Neiman Marcus Group for $2.65 billion, giving Amazon a minority stake in the company.
Companies closely tied to cryptocurrency trading bore the brunt of the losses on Wall Street, with bitcoin dropping from nearly $63,000 at the start of the week to below $56,000, bringing the cryptocurrency’s value back to where it was in February.
Coinbase Global fell 1.4% and Robinhood Markets dropped 1.7%.
In overseas stock markets, London’s FTSE 100 index fell 0.6 percent after Britons ousted the Conservative Party and installed a new government in this week’s general election.
Britain has endured years of turmoil under Conservative governments that have left many voters pessimistic about the country’s future. Britain’s departure from the European Union was followed by the coronavirus pandemic and Russia’s invasion of Ukraine, which have hit the economy hard. Rising poverty and cuts to public services have led to discontent with a “broken Britain.”
Germany’s DAX rose 0.1% after the government agreed on a 2025 budget and stimulus package for Europe’s largest economy, ending a months-long dispute that had threatened to topple Chancellor Olaf Scholz’s center-left coalition.
The disagreements have led to the collapse of an already unpopular government, triggering early parliamentary elections and raising speculation that Germany could follow other European countries in moving politically to the right.
In Asia, Japan’s Nikkei stock average topped 41,000 points early on Friday, surpassing the all-time high it hit on Thursday, but closed slightly lower.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
Stan Cho, The Associated Press
