Stocks on Wall Street experienced a slight dip after the annual revision of US payrolls, as investors now turn their attention to the Federal Reserve minutes leading up to Jerome Powell’s speech on Friday. The market had been on an eight-day winning streak before the recent drop in the S&P 500, prompting concerns about the labor market cooling amidst high Fed rates.
The annual revision to US jobs growth revealed that job growth in the year through March was likely less robust than previously reported. Government data released on Wednesday indicated that the number of workers on payrolls would be revised down by 818,000 for the 12 months through March, equating to around 68,000 fewer jobs each month. While economists had anticipated a decline, some had predicted a loss of up to 1 million jobs.
Ian Lyngen, from BMO Capital Markets, noted that the data was on the softer side, but the delay in its release had kept price action relatively muted. The S&P 500 hovered near 5,600, with Target Corp. seeing a 15% increase after reporting an end to sales declines in the second quarter due to improved discretionary spending. However, Macy’s Inc. slightly missed revenue estimates and lowered its sales outlook for the rest of the year.
Meanwhile, Treasury 10-year yields remained steady at 3.8%, with swap traders pricing in 100 basis points of Fed cuts in 2024. Investors are eagerly awaiting the Fed minutes from the latest policy meeting, where interest rates were held steady. Clues on future rate adjustments and guidance on the completion of quantitative tightening will be closely watched.
In corporate news, Ford Motor Co. announced a recalibration of its electrification strategy, canceling plans for a fully electric SUV that could cost the company around $1.9 billion. Walmart Inc. raised $3.6 billion by selling its stake in Chinese e-commerce firm JD.com Inc., ending an eight-year partnership. US coal producer Consol Energy Inc. agreed to merge with Arch Resources Inc. in a $2.3 billion deal amid the transition to greener fuels.
Brookfield Asset Management is reportedly seeking about €9.5 billion in debt for a potential take-private deal with Spanish pharmaceutical producer Grifols SA. Key events for the week include Eurozone PMI and consumer confidence data, US jobless claims and existing home sales, Japan CPI figures, and Jerome Powell’s speech in Jackson Hole.
In market movements, the S&P 500 rose 0.6%, the Nasdaq 100 climbed 0.8%, and the Dow Jones Industrial Average increased by 0.3%. Currencies saw the Bloomberg Dollar Spot Index rise 0.2%, while cryptocurrencies like Bitcoin and Ether experienced gains. Bond yields remained relatively stable, with commodities like WTI crude and spot gold showing mixed movements.
Overall, the market remains cautiously optimistic as investors await further guidance from the Federal Reserve and monitor corporate developments amidst ongoing economic uncertainties.
