U.S. Stocks Lack Direction Following Monthly Jobs Report


Following the release of the closely watched monthly jobs report, stocks have shown a lack of direction over the course of morning trading on Friday. The major averages have spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are posting modest losses. The Dow is down 54.90 points or 0.2 percent at 33,867.36, the Nasdaq is down 11.30 points or 0.1 percent at 13,667.74 and the S&P 500 is down 5.31 points or 0.1 percent at 4,406.28.

The choppy trading on Wall Street comes after the Labor Department released a report showing U.S. employment increased by less than expected in the month of June.

The Labor Department said non-farm payroll employment jumped by 209,000 jobs in June, while economists had expected employment to shoot up by 225,000 jobs.

The report also showed the surges in employment in April and May were downwardly revised to 217,000 jobs and 306,000 jobs, respectively, reflecting a combined downward revision of 110,000.

Meanwhile, the Labor Department said the unemployment rate edged down to 3.6 percent in June from 3.7 percent in May, in line with economist estimates.

The report also showed annual wage growth remained elevated, coming in at 4.4 percent in June, unchanged from an upwardly revised reading in May.

Economists had expected the pace of growth to slow to 4.2 percent from the 4.3 percent originally reported for the previous month.

Following ADP’s report showing a much bigger than expected surge in private sector employment in June, the Labor Department report has led to some uncertainty about the outlook for interest rates.

While the Federal Reserve is still widely expected to raise rates by another quarter point later this month, the outlook for further rate hikes is likely to be impacted by next week’s inflation data.

“A softer jobs report than widely expected has taken some of the steam out of recent market moves, but the labor market remains too tight for the Fed to relax,” said ING Chief International Economist James Knightley.

He added, “A July rate hike is coming, but labor data is the most lagging of indicators and softer inflation next week could see rate hike expectations for further out moderate a touch.”

Sector News

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Oil service stocks have shown a substantial move to the upside, however, driving the Philadelphia Oil Service Index up by 3.0 percent to its best intraday level in over two months.

The rally by oil service stocks comes amid a notable increase by the price of crude oil, with crude for August delivery climbing $0.73 or 1.0 percent to $72.53 a barrel.

Considerable strength is also visible among airline stocks, which are rebounding after falling sharply in the previous session. Following the 3.8 percent nosedive on Wednesday, the NYSE Arca Airline Index is soaring by 2.2 percent.

Gold, oil producer and steel stocks are also seeing notable strength on the day, while software and pharmaceutical stocks are seeing some weakness.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan’s Nikkei 225 Index tumbled by 1.2 percent, while Hong Kong’s Hang Seng Index fell by 0.9 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is down by 0.2 percent, the German DAX Index and the French CAC 40 Index are both up by 0.5 percent.

In the bond market, treasuries have seen considerable volatility over the course of the morning. Currently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 4.036 percent.

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