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%.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free 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
-
AI Stocks Lead Nasdaq's 398-Point Nosedive: Stock Market TodayThe major stock market indexes do not yet reflect the bullish tendencies of sector rotation and broadening participation.
-
Top Tech Gifts to Grab at Walmart Before ChristmasBig savings on Apple, Bose, HP, Vizio and more while there's still time to shop.
-
AI Appliances Aren’t Exciting Buyers…YetThe Kiplinger Letter Artificial intelligence is being embedded into all sorts of appliances. Now sellers need to get customers to care about AI-powered laundry.
-
If You'd Put $1,000 Into Coca-Cola Stock 20 Years Ago, Here's What You'd Have TodayEven with its reliable dividend growth and generous stock buybacks, Coca-Cola has underperformed the broad market in the long term.
-
If You Put $1,000 into Qualcomm Stock 20 Years Ago, Here's What You Would Have TodayQualcomm stock has been a big disappointment for truly long-term investors.
-
If You'd Put $1,000 Into Home Depot Stock 20 Years Ago, Here's What You'd Have TodayHome Depot stock has been a buy-and-hold banger for truly long-term investors.
-
Stocks Close Out Strong Month With Solid Amazon Earnings: Stock Market TodayAmazon lifted its spending forecast as its artificial intelligence (AI) initiatives create "a massive opportunity."
-
What the Rich Know About Investing That You Don'tPeople like Warren Buffett become people like Warren Buffett by following basic rules and being disciplined. Here's how to accumulate real wealth.
-
Stocks Close September on a High Note: Stock Market TodayA little bit of late risk-on behavior was enough to lift stocks into the green on the last day of September.
-
If You'd Put $1,000 Into Bank of America Stock 20 Years Ago, Here's What You'd Have TodayBank of America stock has been a massive buy-and-hold bust.
-
If You'd Put $1,000 Into Oracle Stock 20 Years Ago, Here's What You'd Have TodayORCL Oracle stock has been an outstanding buy-and-hold bet for decades.
