Stocks traded in both positive and negative territory Friday as investors weighed an onslaught of headlines, including a hotter-than-expected jobs report and a Roaring Kitty livestream.
Ultimately, the main indexes closed lower as folks looked ahead to next week's Fed meeting and key inflation update.
Ahead of the open, the Bureau of Labor Statistics said the U.S. added 272,000 new jobs in May, exceeding economists' estimate for 180,000. The data also showed the unemployment rate rose to 4.0% (3.96% on an unrounded basis) from 3.9% last month. Average hourly earnings – a measure of inflation – were 4.1% higher year-over-year.
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"To those who are worried about inflation – especially the Federal Reserve – the report should raise concerns that wage pressure and sticky inflation is more likely to persist than be transitory," says Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
Indeed, the May jobs report sent Treasury yields spiking and all but dashed hopes for a July rate cut. And according to CME Group's FedWatch Tool, futures traders are now pricing in a 47% chance the Fed will cut rates by a quarter-percentage point in September, down from 55% one day ago.
GameStop adds to losses after Roaring Kitty livestream
Market participants' attention quickly turned from the state of the labor market to GameStop (GME) as the meme stock plummeted 39.4%.
GME shares were already down dramatically ahead of a lunchtime livestream from Keith Gill thanks to the video-game retailer's surprise earnings release and news of another stock offering. But GameStop, which was halted several times in intraday trading, added to its losses after Gill, aka "Roaring Kitty," held his first livestream since 2021.
During the event, which drew more than half a million viewers, the investor said he is not working with any institutional backers and reiterated his support for GameStop CEO Ryan Cohen. Gill also told those watching that none of what he says should be considered advice and that they need to make their own investment decisions.
Samsara drops despite beat-and-raise quarter
GameStop wasn't the only big decliner on Friday. Samsara (IOT) stock fell 12.3% even as the Internet of Things solutions provider reported better-than-expected fiscal first-quarter results and raised its outlook for the full year.
William Blair analyst Dylan Becker (Outperform, the equivalent of a Buy) says the post-earnings downside is likely a result of "overblown expectations and the company's rich multiple." For the record, IOT is trading at 257 times forward earnings.
Over the long term, though, Becker believes "Samsara's rare combination of fast revenue growth and margin improvement will drive outperformance to the market."
As for the main indexes, the Nasdaq Composite fell 0.2% to 17,133, the S&P 500 slipped 0.1% to 5,346, and the Dow Jones Industrial Average shed 0.2% to 38,798.
Inflation data, Fed meeting on tap
Next week's economic calendar could create plenty of fireworks for stocks. In addition to Wednesday morning's release of the May Consumer Price Index (CPI), the Fed will issue its latest policy statement later that afternoon.
This meeting will include the central bank's dot plot, which summarizes what each member expects monetary policy to be going forward, as well as Fed Chair Jerome Powell's presser for potential hints on the Fed's rate-cut timeline.
"Given there are only five meetings between now and the end of the year, we would not be surprised by a minor shift in the median dot, with possibly one rate cut shifting into 2025," says Larry Adam, chief investment officer for the private client group at Raymond James.
There are also a handful of notable tech companies on the earnings calendar, including Creative Cloud parent Adobe (ADBE, +1.6%) and chipmaker Broadcom (AVGO, +0.4%).
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