Wall Street's main indexes are set to open higher after the July 4 holiday. The U.S. job growth in June surpassed expectations despite a downward revision for May. The report reassures markets and supports a potential Federal Reserve rate cut in September. Megacap stocks are trading positively.
Wall Street's main indexes looked to open higher on Friday as markets resumed after the July 4 holiday, buoyed by data showing that U.S. job growth, while slowed, continued at a healthy pace in June.
The Labor Department reported a rise of 206,000 non-farm payrolls in June, exceeding the anticipated 190,000, though May's figures were revised down to 218,000 from 272,000. The unemployment rate remained stable at 4.1%. Average hourly earnings saw a rise of 0.3%, meeting expectations but lower than May's 0.4% increase.
"It's a relatively benign report. The market was generally expecting the job gains to be a little bit lower. If you're the Fed, you're saying - what happened in May is not quite as hot as we thought," commented Emily Bowersock Hill, CEO of Bowersock Capital Partners.
The data bolstered the case for a Federal Reserve interest rate cut in September, with the likelihood of a 25-basis point cut rising to 72%. This follows earlier indicators of easing labor market conditions.
Treasury yields fell, while megacap stocks like Alphabet, Amazon, and Meta Platforms rose about 0.4% each. Tesla saw a 1.9% increase, climbing to its highest level since January.
Earlier data this week showed a four-year low in services sector activity and unexpectedly slumping factory orders, suggesting a cooling U.S. economy. This anticipation of multiple rate cuts helped S&P 500 and Nasdaq reach record highs earlier in the week.
By 8:47 a.m. ET, Dow e-minis were up 46 points, S&P 500 e-minis increased by 4 points, and Nasdaq 100 e-minis climbed 32 points. All major Wall Street indexes are on track for weekly gains.
Looking ahead, with second-quarter earnings approaching, investors are keen to see if Wall Street's rally will extend beyond major stocks and if earnings can justify high valuations. Additionally, department store chain Macy's soared 6.9% on news of an enhanced bid by Arkhouse Management and Brigade Capital.
Conversely, cryptocurrency-related stocks, including Coinbase Global and Riot Platforms, saw losses of 5%-7% following a dip in bitcoin to a more than four-month low.