Nasdaq Reaches New Record Intraday High But Dow Moves To The Downside

Following the release of the closely watched monthly jobs, the major U.S. stock indexes are turning in a mixed performance during trading on Friday.

While the tech-heavy Nasdaq has advanced to a new record intraday high, the S&P 500 has been bouncing back and forth across the unchanged line and the narrower Dow has moved to the downside.

Currently, the Dow is down 91.22 points or 0.2 percent at 39,216.78, but the S&P 500 is up 3.91 points or 0.1 percent at 5,540.93 and the Nasdaq is up 79.80 points or 0.4 percent at 18,268.10.

The mixed performance by the major averages comes following the release of the Labor Department’s closely watched monthly employment report for June.

While employment jumped by more than expected in June, the report also showed downward revisions to job growth in April and May as well as another unexpected uptick by the unemployment rate.

The Labor Department said non-farm payroll employment shot up by 206,000 jobs in June compared to economist estimates for an increase of about 190,000 jobs.

However, the report also showed the increases in employment in April and May were downwardly revised to 108,000 jobs and 218,000 jobs, respectively, reflecting a net downward revision of 111,000 jobs.

The unemployment rate also rose for the third straight month, inching up to 4.1 percent in June from 4.0 percent in May. Economists had expected the unemployment rate to remain unchanged.

With the unexpected uptick, the unemployment rate reached its highest level since hitting a matching rate in November 2021.

Treasury yields have moved lower following the release of the report amid optimism the continued increase by the unemployment rate will convince the Federal Reserve to lower interest rates in the near future.

“On net, the job market looks considerably cooler in the June report than in May, and the unemployment rate at 4.1% is above where the median Fed policymaker projected it at year-end when they compiled economic projections last month,” said Bill Adams, Chief Economist for Comerica Bank.

“From the Fed’s perspective, the labor market isn’t soft enough justify an interest rate cut at this month’s meeting,” he added. “But the labor market’s cooling trend is quite clear. If inflation holds in its recent range, the Fed is likely to make an initial rate cut at the following decision, in September.”

Nonetheless, overall trading activity is somewhat subdued on the day, as some traders remain away from their desks following the Independence Day holiday on Thursday.

Sector News

Airline stocks have shown a significant move to the downside on the day, dragging the NYSE Arca Airline Index down by 1.7 percent.

A modest decrease by the price of crude oil is also weighing on energy stocks, with the NYSE Arca Oil Index and the Philadelphia Oil Service Index falling by 1.5 percent and 1.3 percent, respectively.

Steel, housing and banking stocks have also moved to the downside, while gold stocks have moved notably higher, driving the NYSE Arca Gold Bugs Index up by 1.9 percent.

The strength among gold stocks comes as the price of the precious metal has climbed to its highest levels in a month.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Friday. Japan’s Nikkei 225 Index closed just below the unchanged line, while China’s Shanghai Composite Index fell by 0.3 percent and Hong Kong’s Hang Seng Index tumbled by 1.3 percent.

Meanwhile, the major European markets have moved to the upside on the day. While the German DAX Index has advanced by 0.8 percent, the French CAC 40 Index is up by 0.4 percent and the U.K.’s FTSE 100 Index is up by 0.1 percent.

In the bond market, treasuries have moved higher in reaction to the monthly jobs report. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.9 basis points at 4.307 percent.