Weak Jobs Report Sparks Market Rally

The U.S. labor market cooled sharply in June, with employers adding just 57,000 jobs, well below the 110,000 economists had expected and a significant slowdown from May's revised reading of 129,000. The unemployment rate edged down to 4.2% from 4.3%, but the improvement came alongside a 0.3 percentage point drop in the labor force participation rate to 61.5%, meaning the jobless rate fell partly because people left the workforce rather than because more of them found jobs. Average hourly earnings rose 0.3% on the month and 3.5% year over year, in line with expectations. Prior months were revised sharply lower, with April cut to 148,000 from 179,000 and May trimmed to 129,000 from 172,000, reducing employment gains over the two months by a combined 74,000 jobs. Professional and business services led the gains with 36,000 new jobs, followed by social assistance at 25,000 and health care at 22,000. The clear weak spot was leisure and hospitality, which shed 61,000 jobs on softer-than-usual seasonal hiring. Manufacturing, retail, transportation, financial activities, and government were all little changed. Counterintuitively, markets welcomed the soft report. After a hawkish Fed spent June warning that its next move could be a hike, cooling labor data and downward revisions strip the urgency out of any near-term tightening. Traders moved quickly on the print. According to the CME FedWatch Tool, the probability of a rate hike at the Federal Reserve's July 29 meeting collapsed to roughly 22%, with a hold now the overwhelming favorite at 78%. The timing was helped by a sharp move lower in oil, which has tumbled to around $67 a barrel from above $90 in early June as the energy shock tied to the war with Iran continues to fade. With the single biggest driver of this spring's inflation spike now in retreat, a weaker labor market hands the Fed additional cover to wait rather than tighten. The market reaction was textbook risk-on. S&P 500 futures rose 0.39%, Nasdaq 100 futures gained 0.67%, and Dow futures added 0.55%, while small caps led the way with Russell 2000 futures up 0.84%. The iShares Russell 2000 ETF (NYSE: IWM) had hit fresh record highs the prior session. The rate-sensitive 2-year Treasury yield fell to 4.121%, down about 5 basis points on the session, as hike bets unwound. The U.S. dollar index slid 0.7% to 100.36, gold surged 1.5% to around $4,124 an ounce on the prospect of a less aggressive Fed, and WTI crude eased 0.59% to $67.47 a barrel. #JobsReport #Fed #StockMarket 🌐 Find more market-moving insights at https://www.benzinga.com — your one-stop destination for the latest financial news, data, and expert analysis to stay ahead of the markets. 🖥️ Want the same tools the pros use—without the $10K Bloomberg terminal? Benzinga Edge gives you real-time portfolio alerts, weekly stock picks, and pro-grade research in one command center. 👉 https://bit.ly/4unSKiB ------------------------------------------------------------------------------------ 📲 Follow us on socials @benzinga 🔔 Subscribe To The Channel: https://www.youtube.com/@Benzinga ------------------------------------------------------------------------------------ ⚠️ Disclaimer: Investing in financial markets carries risk, and there are no guaranteed returns. All information is for educational purposes only and should not be taken as financial advice. Always do your own research and speak with a qualified financial advisor before making investment decisions. Only invest what you can afford to lose. Past performance does not guarantee future outcomes.