Stock Market Today: Stocks Slide on Shockingly Strong Jobs Data
The major indexes tumbled as data on private payrolls and weekly jobless claims raised expectations for more rate hikes.
Surprisingly strong jobs data sent a shockwave through the equities market Thursday, with stocks tumbling across the board. Still, the major indexes managed to finish off their session lows thanks to one sliver of hope in the labor market.
Ahead of the opening bell, data from ADP showed the U.S. added 497,000 private-sector jobs in June. This was the biggest monthly increase since July 2022, and more than doubled the 220,000 new payrolls economists' were expecting. The bulk of new positions were created in the "consumer-facing service industries," according to the report.
This theme of strength in the service sector was echoed in this morning's Institute for Supply Management (ISM) services purchasing managers index (PMI), which jumped to 53.9% in June from May's reading of 50.3%.
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.
"Demand for services is continuing to keep the labor market tight and drive inflation with job creation in June more than doubling analysts' expectations, and the latest ISM PMI-Services release reporting that economic growth within the category is accelerating," says José Torres, senior economist at Interactive Brokers.
Meanwhile, the Labor Department said earlier that initial jobless claims climbed 12,000 last week to 248,000.
One silver lining on the jobs front was the mid-morning release of the Job Openings and Turnover Survey (JOLTS), which showed job openings fell to 9.8 million in May from April's 10.3 million.
Energy stocks sell off on Iran worries
Expectations for more rate hikes sent Treasury yields to their highest levels since March. The spike, in turn, pressured rate-sensitive sectors like tech (-0.3%) and communication services (-0.8%).
But the worst performer of all 11 S&P 500 sectors was energy (-2.3%), which dove on reports that Iran tried to seize two oil tankers near the Strait of Hormuz. ConocoPhillips (COP, -3.5%) and Exxon Mobil (XOM, -3.7%) were just two energy stocks that suffered outsized losses, with the latter also getting hit after saying lower natural gas prices will likely weigh on its second-quarter earnings.
By the time the closing bell rang, the tech-heavy Nasdaq Composite was down 0.8% at 13,679, the broader S&P 500 was off 0.8% at 4,411, and the blue chip Dow Jones Industrial Average had dropped 1.1% to 33,922.
Monthly jobs report on deck
Today's batch of mostly disappointing economic data makes tomorrow's monthly jobs report all the more anxiously awaited. The Fed has mentioned several times that labor market tightness will likely force it to keep interest rates higher for longer in order to bring inflation under control.
Jan Hatzius, chief economist at Goldman Sachs, expects tomorrow's data to show the U.S. added 250,000 new jobs in June. While this is lower than the 339,000 jobs added in May, remember that economists were only anticipating the addition of 195,000 new positions that month. Furthermore, "job growth tends to pick up in June when the labor market is tight – reflecting strong hiring of youth summer workers – and all four of the Big Data indicators we track indicate a strong pace of job growth," the economist added.
In other words: Buckle up, because Friday could be another volatile session on Wall Street.
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at Schaeffer's Investment Research. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.
-
A Modern Guide to Money Etiquette: Gifts, Tips, Splitting Bills and More
What is modern money etiquette? The customs for splitting a restaurant check, purchasing a wedding gift, tipping and more have evolved. These guidelines can help.
By Emma Patch Published
-
Want to Give Money to Your Adult Children? 10 Things You Should Know
It’s less taxing to give money to your adult children than you might think. A good plan can help you avoid certain pitfalls — and drama.
By Jeremy Greenfield Published
-
Fed Goes Big With First Rate Cut: What the Experts Are Saying
Federal Reserve A slowing labor market prompted the Fed to start with a jumbo-sized reduction to borrowing costs.
By Dan Burrows Published
-
5 Stocks to Buy for a Trump Presidency
The race for the White House is heating up and these five stocks are set to benefit if Donald Trump claims victory.
By Will Ashworth Published
-
Stock Market Today: Stocks Retreat Ahead of Nvidia Earnings
Markets lost ground on light volume Wednesday as traders keyed on AI bellwether Nvidia earnings after the close.
By Dan Burrows Published
-
Stock Market Today: Stocks Edge Higher With Nvidia Earnings in Focus
Nvidia stock gained ground ahead of tomorrow's after-the-close earnings event, while Super Micro Computer got hit by a short seller report.
By Karee Venema Published
-
Stock Market Today: Dow Hits New Record Closing High
The Nasdaq Composite and S&P 500 finished in the red as semiconductor stocks struggled.
By Karee Venema Published
-
Stock Market Today: Stocks Pop After Powell's Jackson Hole Speech
Fed Chair Powell's Jackson Hole speech struck a dovish tone which sent stocks soaring Friday.
By Karee Venema Published
-
Stock Market Today: Stocks Drop Ahead of Powell's Jackson Hole Speech
Sentiment turned cautious ahead of Fed Chair Powell's highly anticipated speech Friday at the Jackson Hole Economic Symposium.
By Karee Venema Published
-
Stock Market Today: Stocks Rise After Jobs Data Lifts Rate-Cut Odds
Preliminary data from the Bureau of Labor Statistics shows job growth was lower than previously estimated.
By Karee Venema Published