U.S. stocks close lower as high job growth cools rate cut expectation

New York [USA], June 8: U.S. stocks ended lower on Friday, as the U.S. labor market added more jobs than expected in May, signaling resilience despite previous signs of an economic slowdown.
The Dow Jones Industrial Average fell by 87.18 points, or 0.22 percent, to 38,798.99. The S&P 500 sank 5.97 points, or 0.11 percent, to 5,346.99. The Nasdaq Composite Index shed 39.99 points, or 0.23 percent, to 17,133.13.
Seven of the 11 primary S&P 500 sectors ended in red, with utilities and materials leading the laggards by losing 1.09 percent and 1.01 percent, respectively. Meanwhile, financials and technology led the gainers by rising 0.35 percent and 0.20 percent, respectively.
According to the Bureau of Labor Statistics, the labor market added 272,000 nonfarm payroll jobs in May, surpassing economists' expectations of 180,000. However, the unemployment rate edged up to 4 percent from 3.9 percent in the previous month. This followed April's addition of 165,000 jobs.
These figures underscore the Federal Reserve's challenge in deciding when and how quickly to lower interest rates. While the economy and labor market remain robust, inflation continues to be persistent, justifying the case for maintaining higher rates for longer. Nonetheless, there are emerging concerns, such as inflation's impact on lower-income consumers and increasing household debt.
"They're really walking a tightrope here," said Robert Sockin, Citi senior global economist. He noted that the longer the Fed holds rates steady, the more cracks could develop in the economy. However, IBM vice chairman and former National Economic Council director Gary Cohn said people should all be happy that they have a strong economy. "At the end of the day, it's all about the economy, it's all about GDP growth, GDP corporate earnings, the health of the consumer, and that's going to win out all of the time in the long-run."
After Friday's labor report, the yield on the 2-year U.S. Treasury note spiked to 4.887 percent, with the 10-year yield climbing to 4.434 percent as of 4:30 p.m. EDT Friday. Investors now are pricing in a 49 percent chance that the Fed cuts rates in September, down from a roughly 68.7 percent chance seen just a day prior, per the CME FedWatch Tool.
Nvidia is executing a 10-for-1 stock split, and these shareholders will receive nine additional shares for each share they own after the market closes on Friday. Trading on a split-adjusted basis will begin on Monday. Nvidia's current share price stands at 1,208.88 U.S. dollars.
Source: Xinhua