Stocks struggled to find direction after this morning's release of the June jobs report, which gave a mixed picture on the labor market.
While jobs growth was the smallest since December 2020, steady wage growth and a historically low unemployment rate opens the door to another rate hike at the next Fed meeting.
The U.S. added 209,000 new jobs in June, the Bureau of Labor Statistics reported Friday. This was well below May's downwardly revised 306,000, as well as economists' forecast. Average hourly earnings growth remained unchanged from the prior month, rising at an annual pace of 4.4%, while the unemployment rate ticked lower to 3.6% from 3.7%.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Today's jobs numbers were certainly softer than expected – especially after yesterday's ADP upside surprise – but they still showed gains that will likely keep the Fed on track for another rate hike later this month," says Mike Loewengart, head of model portfolio construction at Morgan Stanley. The central bank has made cooling off the labor market a linchpin of its inflation fight, Loewengart says, adding that "one month of favorable data is just one battle, not the war."
Indeed, according to CME Group, futures traders are now pricing in a 92.4% probability of a 0.25% rate increase at the next Fed meeting, up from 50.9% one month ago.
Rivian is the latest EV stock to soar
Meanwhile, in single-stock news, Rivian Automotive (RIVN) spiked 14.3% after Wedbush analyst Dan Ives maintained an Outperform (the equivalent of Buy) rating on the electric vehicle stock and boosted his price target to $30 from $25. The new price target represents implied upside of 21.5% to today's close at $24.70.
"We believe after a number of 'one step forward, two steps back' excuses for Rivian and supply chain headaches, the company is finally making a major turn towards executing on its longer term business model," Ives wrote in a note to clients.
Today's gain brought Rivian's one-week return to nearly 50%. Helping to kick things off for the stock was Monday's release of Q2 production figures, which showed RIVN produced 13,992 vehicles and delivered 12,640 – roughly tripling the year-ago figures. Tesla (TSLA) also got a lift on solid Q2 deliveries, and ended today with a weekly gain of almost 5%.
At the close, the Nasdaq Composite was down 0.1% at 13,660, the S&P 500 was off 0.3% at 4,398, and the Dow Jones Industrial Average had shed 0.6% to 33,734. All three indexes finished lower for the week.
June CPI, Q2 earnings season on tap
So what's in store for next week? It's set to be a busy one, that's for sure. On the economic front, the June Consumer Price Index (CPI) will be released ahead of Wednesday's open. Following today's mixed jobs data, the next CPI report "will be even more important for financial markets to consider if the pace of inflation is edging lower quickly enough to satisfy the Fed's need to quell inflation with two additional rate hikes or will July's rate hike suffice," says Quincy Krosby, chief global strategist for LPL Financial.
Additionally, second-quarter earnings season kicks off next Friday, with JPMorgan Chase (JPM) and several of its big bank peers making an appearance on the earnings calendar. The estimated decline in S&P 500 earnings is 6.8%, says John Butters, senior earnings analyst at FactSet, which will mark the largest drop since Q2 2020 (-31.6%) if it's the actual figure. It will also be "the third straight quarter in which the index has reported a (year-over-year) decrease in earnings," the analyst says.
The biggest declines in earnings are expected to come from healthcare, materials, and energy stocks, Butters adds, while consumer discretionary and communication services stocks are projected to report the biggest increases.
Related Content
-
Stock Market Today: Have We Seen the Bottom for Stocks?Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
-
Is the GOP Secretly Planning to Raise Taxes on the Rich?Tax Reform As high-stakes tax reform talks resume on Capitol Hill, questions are swirling about what Republicans and President Trump will do.
-
What Wall Street's CEOs Are Saying About Trump's TariffsWe're in the thick of earnings season and corporate America has plenty to say about the Trump administration's trade policy.
-
Stock Market Today: Great Power Affairs Mesmerize MarketsThe U.S. and China are at least talking about talking about tariffs, and investors, traders and speculators are showing a little less fear.
-
Stock Market Today: Trump Retreats, Markets RejoiceStocks rally, yields soften, the dollar rises, and even beaten-down names enjoy the wages of potential trade peace.
-
Tesla Stock Pops as Elon Musk Promises DOGE Draw BackTesla reported a sharp drop in first-quarter earnings and sales, as the EV maker suffered a backlash to its CEO's political ambitions.
-
Stock Market Today: Dow Drops 971 Points as Powell Pressure Ramps UpPresident Trump is increasing his attacks against Jerome Powell, insisting the Fed chair cut interest rates.
-
Stock Market Today: Stocks Gain on Tech, Auto Tariff TalkThe Trump administration said late Friday that it will temporarily halt tariffs on some Chinese tech imports.
-
Stock Market Today: Stocks Surge to Close a Volatile WeekIt was another day with a week's worth of both news and price action, but it ended on a strongly positive note.
-
Stock Market Today: Uncertainty Proliferates: Dow Loses 1,014 PointsWeaker-than-expected consumer inflation data wasn't enough to stabilize sentiment during another volatile day for financial markets.
