U.S. Stocks On Hold After Big Payroll Gains

Barry Adams
08 Jul, 2022
New York City

For today, investors put aside fears of a recession and shifted focus to the Fed's next move after the release of jobs report. 

With monthly job growth over 450,000 this year and the steady unemployment rate of 3.6% put asides the fears of a recession for now.  

The S&P 500 index declined 3.2 to 3,895.06 and the Nasdaq index rose 13.96 to 11,569.99. 

For the week, the S&P 500 index added 2.6% and the Nasdaq Composite index gained 5.0%. 

Futures of crude oil increased $2.08 to $104.81 a barrel and natural gas fell 25 cents to $6.04 a unit. 

The yield on 10-year Treasury notes increased to 3.08% after the release of the jobs report. 

 

Robust Labor Market 

Non-farm payrolls increased 372,000 in June, according to the Bureau of Labor Statistics. 

The strong jobs report surpassed the estimate of 250,000 increase that some economists had expected. 

The jobless rate held at 3.6% for the fourth month in a row in June after strong hiring in  professional and business services, leisure and hospitality, and healthcare. 

Total number of unemployed remained at 5.9 million, nearing the 3.5% jobless rate and 5.7 million unemployed in February 2020, just before the onset of Covid-19 pandemic. 

 In June, the number of long-term unemployed, those without a job for 27 weeks or more, was essentially unchanged at 1.3 million,  215,000 higher than in February 2020. 

The long-term unemployed accounted for 22.6% of all unemployed persons in June.

The bond yields rose after the release of sharply higher-than-expected job gains, fueling speculation that the Fed will increase the rate by 75 basis points at its next meeting on July 26-27. 

The economy contracted at 1.6% in the first quarter and is estimated to shrink at 1.2% in the second quarter according to the Atlanta Fed's GDPNow tracker.  

 

Energy Prices Dominate European Economic Activities 

European markets advanced in cautious trading after Italian production declined for the first time in four months. France's trade and current account deficit widened and Norway's trade surplus soared on a surge in energy exports. 

Italy's industrial production decreased for the first time in four months in May, the statistical office Istat said on Friday. 

Industrial production decreased 1.1% in May after rising 1.4% in April on a monthly basis and a first decline since January when production fell 3.3%. 

France's trade deficit widened to 12.99 billion euros from 12.71 billion euros in April, the custom office said on Friday. 

Current account deficit increased to 3.9 billion euros from 2.7 billion euros in April, the Bank of France said on Friday. 

Norway's trade surplus rose in June after exports surged, Statistics Norway said on Friday. 

Norway's trade surplus increased to NOK 87.46 billion from NOK 25.07 a year ago. 

June exports jumped 77.9% after natural gas shipment soared 232.1% and crude oil deliveries rose 59.9%. 

 

Japan's Former Premier Abe Assassinated 

Asian markets closed mixed but market indexes in Japan turned lower after Japan's former prime minister Shinzo Abe was assassinated while campaigning in a city near Kyoto. 

The killing of Abe sent shockwaves in the nation not accustomed to gun violence, Japan has one of the strictest gun controls in the world.  

Abe was shot from behind by a 41-year old man using a homemade pistol at 11:30 a.m. local time when he was delivering a campaign speech near Yamato-Saidaiji railway station located in Nara city, according to local police. 

The suspect Tetsuya Yamagami is under custody, Chief Cabinet Secretary Hirokazu Matsuno told reporters.

 

GameStop Fires CFO 

GameStop Corp fell 4.8% to $128.54 and the company fired its chief finance officer Michael Recupero and promoted its chief accounting officer Diane Saadeh-Jajeh to the post. 

Earlier in the the week,  videogame retailer announced a 4-for-1 stock split.  

 

Levi Strauss' Inventories Surge 

Levi Strauss gained 18 cents to $16.54 after the apparel maker and retailer said quarterly sales rose 15% and earnings dropped 23% on charges linked to closure of Russian operations. 

The strong dollar also impacted international sales growth. 

Revenues in the second quarter ending in May increased 15% to $1.5 billion and rose 20% on a constant currency basis. 

Net income in the quarter declined 23% to $50 million from $65 million a year ago and earnings per share dropped to 12 cents from 16 cents.

Revenues in the quarter shot up 29% after the company bulked up core products and took over a wholesaler's operation in Thailand. 

 

WD-40 Plunges On Strong Dollar Worries 

WD-40 Company plunged 14.9% to $174.30 after the chemical maker reported sharply lower earnings and lowered its annual outlook. 

WD-40 said sales in the third quarter ending in May declined 9% to $123.7 million and sales were affected after translating foreign sales to the strong U.S. dollar. 

Net income in the quarter declined 31% to $14.5 million or $1.07 a diluted share from $21.0 million or $1.52 a share. 

 

Warren Buffet Wants Occidental Petroleum 

Occidental Petroleum declined 0.8% to $60.93 and Warren Buffett-controlled Berkshire Hathaway increased its stake in the oil explorer to 18.7%. 

Berkshire is likely to increase its stake to 20%, the maximum limit for a passive investor. 

 

Spirit Delays Shareholder Meeting Again 

Spirit Airlines Inc increased 3.4% to $24.76 after the company postponed its special shareholder meeting to vote on its merger deal with Frontier till July 15.