NFP Plunges, S&P 500 Hits Record High
Wall Street traded mostly higher on Friday (Aug 7) after weak US labor data eased concerns regarding a potential Federal Reserve interest rate hike in September. The S&P 500 rose approximately 0.3% to hit a new record high, the Nasdaq 100 gained 0.9%, while the Dow Jones remained relatively flat.
Market sentiment shifted after July Nonfarm Payrolls fell by 23,000, contrasting sharply with the forecast of an 80,000 increase. June data was also revised down to show a gain of only 20,000 jobs, while revisions for May and June indicated a total job count 103,000 lower than previously reported.
Inflationary pressure stemming from the labor market also subsided as wage growth slowed. Average Hourly Earnings rose just 0.1% month-over-month and 3.2% year-over-year—both figures coming in below expectations. The unemployment rate fell to 4.1%, though the labor force participation rate also declined to 61.4%.
The data drove US bond yields lower as investors scaled back expectations for a Fed rate hike. This environment served as a positive catalyst for interest-rate-sensitive stocks, particularly in the technology sector and among companies with significant funding needs.
Shares of SanDisk and Western Digital rebounded by approximately 2% each following a sharp sell-off the previous day. SpaceX also continued its recovery, even as roughly $101 billion worth of its shares emerged from the post-IPO lock-up period.
Newsmaker Analysis: Negative NFP figures and weakening wage growth acted as positive drivers for Wall Street by alleviating pressure on the Fed to raise interest rates. However, the market must still monitor inflation and oil prices closely; should price pressures intensify again, expectations for higher interest rates could resurface and cap the rally in US stocks.
Source: Newsmaker.id
