NFP Disappoints, Wall Street Hits Record High
Wall Street rallied during Friday's trading session (August 7) after US labor data revealed a sharp slowdown. The S&P 500 rose 0.6% to set a new record, the Nasdaq 100 surged 1.2%, and the Dow Jones gained 0.3%.
Market sentiment improved after July Nonfarm Payrolls showed a decline of 23,000 jobs. Data for May and June were also revised downward by a combined 103,000, indicating that the US labor market was weaker than previously estimated.
Wage growth slowed, while the labor force participation rate declined again. Although the unemployment rate fell to 4.1%, the market interpreted the report as a sign that inflationary pressure from the labor sector is beginning to ease.
The weak data led investors to scale back expectations for near-term Federal Reserve interest rate hikes. US bond yields and the dollar fell, while the market now anticipates that the next rate hike likely won't occur until late 2026.
Stock sentiment was also bolstered by reports that the US might lift the blockade on Iranian ports if an agreement to reopen the Strait of Hormuz is reached. This news weighed on oil prices late in the session and helped alleviate inflation concerns.
Newsmaker Analysis: Weak NFP figures served as a positive driver for Wall Street by reducing pressure on the Fed to raise interest rates. As long as the labor market weakens gradually without triggering recession fears, stocks are likely to remain supported. However, a spike in inflation or oil prices could still rapidly alter interest rate expectations. (arl)
Source: Newsmaker.id
