U.S. Treasury Yields Turn Lower After Sharp Payroll Growth Revisions

Barry Adams
05 Jul, 2024
New York City

Stocks on Wall Street turned higher on the final day of the holiday-shortened week as investors returned from the Independence Day holiday. 

Treasury yields turned sharply lower after nonfarm payrolls were sharply revised lower in April and May, indicating labor market conditions are softening, supporting the case for the Federal Reserve to lower rates as early as September. 

Market sentiment has been on the defensive this week after the service sector unexpectedly contracted, weekly jobless claims rose for the ninth week in a row, and private payroll growth slowed in June. 

For the week, the S&P 500 index headed higher by 0.7% and the Nasdaq Composite gained 1.8%, supported by another leg up in the tech stocks. 

The two widely followed indexes are set to close higher for the fifth consecutive week in a row. 

 

Nonfarm Payroll Growth Slowed in June 

The U.S. economy expanded payrolls at a slower pace in June than the previous month, the latest update from the U.S. Bureau of Labor Statistics showed Friday. 

Nonfarm payrolls increased by 206,000 in June, slower than 218,000 in May, and the jobless rate increased to 4.1% in the month, the highest since November 2021. 

Despite the steady expansion of payrolls over the last three years, the labor force participation rate held at 62.6% and the employment-population rate remained at 60.1%. 

Both measures have remained steady over the year, indicating a churn in the employment base but little improvement in expanding the overall employment base. 

The number of people not in the labor force who currently want a job declined by 483,000 to 5.2 million in June. 

These individuals were not counted as unemployed because they were not actively looking for a job during the 4 weeks preceding the survey. 

The average hourly earnings for all employees increased 10 cents, or 0.3%, from the previous month of 3.9% a year ago to $35.0. 

The April nonfarm payroll increase was revised down to 108,000 from 167,000, and the change for May was revised to 212,000 from 272,000. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.1% to 5,543.37, and the Nasdaq Composite rose 0.4% to 18,267.56. 

The yield on 2-year Treasury notes edged lower to 4.64%, 10-year Treasury notes decreased to 4.31%, and 30-year Treasury bonds edged lower to 4.51%.

WTI crude oil decreased $0.15 to $83.86 a barrel, and natural gas prices edged up 3 cents to $2.38 a thermal unit.

Gold decreased by $24.67 to $2,381.24 an ounce, and silver rose 51 cents to $30.87. 

The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 105.07.

 

U.S. Stock Movers

Nvidia decreased 0.8% to $127.28, and the artificial intelligence application processing chipmaker is set to close higher this week by 3% after falling more than 6% over the previous two weeks. 

Chipotle Mexican Grill advanced 0.2% to $61.78 after the fast food restaurant chain operator split its stock 50-to-1 and traded ex-split on June 26. 

The company's fundamentals remain strong, revenue in the first quarter of 2024 rose 14%, and same-store sales increased 7%.