Hot Jobs Report Dashes All Hopes of Rate Cut Next Week

Barry Adams
07 Jun, 2024
New York City

Major averages on Wall Street declined after the U.S. economy added sharply higher-than-expected jobs in May. 

The S&P 500 index and the Nasdaq Composite declined more than 0.2% after the hotter-than-expected payroll dashed all hopes of the Federal Reserve cutting rate at its next meeting. 

The Federal Reserve is most likely to hold rates steady after the two-day meeting ending on June 12. 

Nonfarm payrolls increased by 272,000 in May from the downwardly revised 165,000 in April, higher than the monthly average of 232,000 in the last 12 months. 

In May, employment continued to trend up in several industries, led by health care; government; leisure and hospitality; and professional, scientific, and technical services.

Average hourly wages increased 0.4%, or 14 cents, to $34.91 and edged up 4.1% over the last year. 

Both the unemployment rate, at 4.0%, and the number of unemployed people, at 6.6 million, changed little in May; a year ago, the jobless rate was 3.7%, and the number of unemployed people was 6.1 million. 

The jobless rate increased despite the surge in employment in the last several months because the expanding labor market is attracting more people to look for jobs, increasing the jobless rate. 

Both the labor force participation rate, at 62.5%, and the employment-population ratio, at 60.1%, barely budged in May. 

These measures showed little change over the year. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.1% to 5,358.77, and the Nasdaq Composite fell 0.01% to 17,176.77.

The yield on 2-year Treasury notes edged lower to 4.75%, 10-year Treasury notes decreased to 4.31%, and 30-year Treasury bonds edged higher to 4.46%.

WTI crude oil increased $0.01 to $74.08 a barrel, and natural gas prices rose 9 cents to $2.84 a thermal unit.

Gold increased by $2.21 to $2,357.08 an ounce, and silver rose 31 cents to $30.33. 

The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 104.32.

 

U.S. Stock Movers

GameStop declined 18% to $37.72 after the video game retailer posted a larger-than-expected decline in sales in its latest quarter. 

Net sales in the first quarter dropped 29% to $881.8 million from $1.23 million, net loss shrank to $32.3 million from $50.5 million, and diluted loss per share shrank to 11 cents from 17 cents a year ago. 

The retailer said it may sell an additional 75 million shares on top of the 45 million shares it sold while raising $900 million in May. 

The company decided to bring forward the release of its quarterly results because social media influencer and company investor Keith Gill has scheduled a YouTube livestream to discuss his investment in the company. 

Vail Resorts dropped 13% to $168.92 after the ski resort operator reported weaker-than-expected fiscal third quarter results. 

Revenue in the quarter ending in April increased to $1.28 billion from $1.24 billion, net income rose to $362 million from $325 million, and diluted earnings per share increased to $9.54 from $8.18 a year ago. 

The company declared a quarterly cash dividend of $2.22 per share payable on July 10 to shareholders on record on June 25. 

The company also repurchased 0.3 million of its own shares in the quarter at an average price of $217 for a total of $75 million, increasing the total purchase to 0.6 million for $125 million in the current fiscal year. 

On May 2, the company closed on its acquisition of Crans-Montana Mountain Resort in Switzerland, the company's second ski resort in Europe.