US stock markets displayed a mixed performance yesterday, impacted by a softer-than-expected June jobs report. The Dow Jones Industrial Average surged, logging its fourth consecutive weekly gain and reaching a new all-time high, rising by 1.10% to 52,865.24. This positive movement was attributed to reduced pressure on the Federal Reserve to raise interest rates, as the employment report indicated a cooling labor market. The S&P 500, however, ended nearly flat, down 0.06% to 7,478.66 points.
The Nasdaq Composite index experienced a decline, falling 0.87% to 25,813.75, primarily due to a significant selloff in technology and semiconductor stocks. Investors engaged in profit-taking after strong rallies in these sectors earlier in the year. The weak jobs data, while easing overall rate hike fears, did not prevent the tech-heavy Nasdaq from pulling back. Concerns about Meta Platforms' plan to sell computing power also contributed to market sentiment, particularly affecting AI-related stocks.
The jobs report revealed that the U.S. economy added 57,000 jobs in June, significantly below the economists' estimate of 110,000. The unemployment rate was 4.2%, in line with expectations of 4.3%. This data led to a weakening dollar and scaled back expectations for a September rate hike by the Fed, with probabilities decreasing from 64.1% to 55%. Despite the broader market relief, Tesla's shares fell by 7.49% to $393.45, despite the company reporting record second-quarter deliveries of 480,126 vehicles, exceeding Wall Street estimates.
Several banks, including Morgan Stanley, Credit Agricole, and TD Securities, are pushing back on a bullish outlook for the dollar, suggesting it is overbought and much of the Fed's hawkish stance is already priced in. A dovish repricing by the Fed could further weigh on the dollar, while the yen surged amid speculation of Japanese intervention. The stock market's future direction will likely depend on upcoming economic data and corporate earnings, especially with valuations remaining elevated. Oil prices also fell, offering some support to overall market sentiment, as progress was reported in talks regarding the Middle East conflict.
