Job growth was expected to slow as the Fed continues to hike interest rates to tame inflation, but this report shows a labor market still running hot.Friday's jobs report is a crucial one as it's one of two the central bank will see before it decides how much to raise rates at its September meeting.
Policy makers will have another jobs report and two more consumer price index numbers to weigh before the central bank makes its next rate decision.Stocks ended the first week of August mixed after the better-than-expected July jobs print on Friday.Both yields rose after the strong July jobs report ignited worries the Federal Reserve would be more aggressive about hiking interest rates to combat inflation.Treasury yields, which move opposite price, rose sharply Friday after the government reported 528,000 jobs were added in July, more than double what was expected.Oil prices eked out a slight gain on Friday, but ended the week sharply lower as recession fears and concerns around a slowdown in demand weighs.Stocks fell after the July jobs report came in much stronger than expected, signaling a more aggressive Fed going forward.Shares of Tesla fell nearly 7% in intraday trading Friday after the company's annual shareholder meeting, which took place on Thursday.Black workers saw unemployment inch slightly higher to 6% in July, while the broader job market saw that rate tick down to 3.5%, according to data from the Bureau of Labor Statistics released Friday.At the same time, women continued to make strides in jobs recovery, with the unemployment rate ticking down to 3.1% for those 20 and older.Don't expect the Fed to slow down on its rate hiking path any time soon, especially after this latest jobs report, according MKM Partners' Michael Darda."The jobs and wage numbers seen in July are not what the Fed wants at a time when the economy has overshot its potential and inflation is running at more than 3x the Fed's target," the firm's chief economist and market strategist said.Even though the July jobs report signaled no sign of recession and that inflation is still running hot, it's not the last word on the U.S.Stocks were down midday Friday, though off session lows, as Wall Street digested the July jobs report.
The report showed that twice as many jobs were added last month than economists expected, that the unemployment rate declined to 3.5% and that wage growth was stronger than forecast.The dollar rallied against a basket of currencies Friday on the back of that jobs report that crushed analyst expectations.Stocks clawed back some of their earlier losses after digesting the better-than-expected July jobs report.The 10-year Treasury yield surged to 2.834% Friday morning following the July jobs report, which came in well above expectations and showed solid job growth in the month.Bank of America economists added another quarter point of a rate hike into their forecast for Federal Reserve rate hikes this year, after July's strong jobs report.The firm's economists had been expecting a 50 basis point hike in the fed funds rate for September, followed by a 25 basis point hike in November.
They now expect a 50 basis point, or half point, hike in November as well.
They left the forecast for a quarter point hike in December unchanged.A basis point equals 0.01 of a percentage point.
The Federal Reserve raised the fed funds target rate by 75 basis points in both June and July.The fed funds futures market is also pricing in a 75 basis point hike for September, following the report that 528,000 jobs were added in July, more than double what was expected.The much-stronger-than-expected July jobs report caught markets by surprise and has Fed watchers ratcheting up expectations for rate hikes.The economy added 528,000 jobs in July, more than double expectations.
Fed funds futures for October are now pricing in a 72% chance of a 75 basis point hike in September, up from 18% Thursday, according to Peter Boockvar, chief investment officer of Bleakley Advisory Group.
(a basis point is 0.01 of a percentage point).Boockvar said the market is also pricing out some of the rate cutting it expected for next year, and the June, 2023 futures were higher by 25 basis points, putting expectations for Fed funds at 3.54%.
For the Fed, this is another 75 basis point hike," said Diane Swonk, chief economist at KPMG.
She said the September rate hike could be 75 basis points now not 50 , based on the jobs report alone."The Fed is dealing with strong demand in a supply constrained economy, and that demand extends to labor," said Swonk.Stocks fell at the opening bell Friday following a better-than-expected jobs report.The stronger-than-expected July jobs report means that the Federal Reserve will likely raise interest rates by three-quarters of a percentage point at its next meeting, as opposed to the half-percentage-point hike markets expected, Seema Shah, chief global strategist at Principal Global Investors, said.
Traders hoped they would slow the pace to a half point hike at that meeting.Stock futures fell Friday after the July jobs report came in much stronger than expected, showing more jobs added, a lower unemployment rate and higher wage growth than economists forecast.
economy added many more jobs than was expected last month.
government said 528,000 jobs were added in July, easily beating a Dow Jones estimate of 258,000.Amazon will acquire iRobot for $61.00 per share, the consumer robot company announced on Friday.Shares of DoorDash were up more than 10% in premarket trading Friday after the company reported quarterly results that beat expectations after market close Thursday.
jobs reportIf Friday's jobs report shows the U.S
economy added fewer workers in July than the previous month, it is not necessarily a sign of economic weakness, according to Brad McMillan, CIO at Commonwealth Financial Network
Max Kettner, chief multi-asset strategist at HSBC Bank said the comeback is "wishful thinking," and he would need to see further repricing of rate hike expectations and another sharp drop in real yields to believe it
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