Wall Street Breakfast: What Moved Markets
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Stocks stumbled through a choppy trading session to end lower Friday, as investors digested the latest nonfarm payrolls report following hotter than expected private hiring data the previous day. The U.S. government report showed the economy created 209,000 jobs in June, well below expectations and the smallest increase since the end of 2020. The data was taken by some as a sign that the Federal Reserve's interest rate hikes were finally starting to cool the labor market, but other details of the report such as stronger than forecast wage gains suggested the Fed may have reason to resume raising rates later this month. After the mixed data, equities may be ripe for a pullback following big gains in June and in the second quarter, which could lead to choppiness and consolidation heading into earnings season. Yields were mixed on Friday. The longer-end 10-year yield was up 2 basis points to 4.06% while the more rate-sensitive 2-year yield was down 7 basis points to 4.94%. For the week, the Dow Jones dropped 1.9% - its largest weekly decline since March - the S&P 500 fell 1.2% and the Nasdaq Composite closed down 0.9%. Read a preview of next week's major events in Seeking Alpha's Catalyst Watch.
The Supreme Court has overturned the Biden administration’s student-debt forgiveness plan in a 6-3 decision, ruling it exceeded the authority Congress granted to the executive branch. The plan, struck down on Friday, would have wiped off $430B in loans from the government's books, but there are already some alternatives that are in the making. "This carries huge implications for inflation, consumer discretionary spending, and the distribution of wealth in the U.S.," writes SA analyst Logan Kane, analyzing winners and losers from the landmark ruling. Related student loan stocks, including SoFi Technologies (SOFI), Sallie Mae (SLM), Navient (NAVI), and Nelnet (NNI), have been jittery since the ruling. (916 comments)
Call it a trade war, a tech war, or even a chip war, but the fight between the world's two largest economies is ratcheting up to the next level. China has unveiled a set of national security restrictions that are likely to further disrupt the global supply chain by placing export controls on chipmaking metals gallium and germanium. The U.S. has opposed the latest restrictions and plans to consult with its allies to address the issue. Treasury Secretary Janet Yellen, the top U.S. economic policymaker, is currently in China meeting senior officials to help defuse tensions with Beijing. (65 comments)
Instagram has launched Threads, its short-posting text app, as Meta Platforms (META) CEO Mark Zuckerberg takes on Elon Musk and Twitter. "Let's do this," Zuckerberg declared, before the app garnered 30M downloads within 24 hours. Musk's response? "It is infinitely preferable to be attacked by strangers on Twitter, than indulge in the false happiness of hide-the-pain Instagram." But his bravado quickly faded, with Twitter threatening to sue Meta. Many analysts have lauded Threads, with some projecting a long-term sales boost for Meta, while Investing Group Leader Daniel Jones acknowledged some risks associated with the launch, but believes the good outweighs the bad. (148 comments)
The Labor Department's closely-watched nonfarm payrolls report showed that the U.S. added fewer jobs than expected. U.S. nonfarm payrolls rose 209K in June, falling short of the 225K expected and sliding from 306K in May, which was the second-strongest month for job creation this year. Federal Reserve Chair Jerome Powell made plain last month that it will take "some softening of the labor market for inflation to come down" closer to 2%. A slew of data this week pointed to a tight labor market - the ADP's measure of private hiring smashed expectations and the Challenger Job Cuts Report signaled a sizable drop in job cuts. Conversely, the JOLTS report showed a fall in job openings, and the number of Americans filing for initial jobless claims rose over the past week. (6 comments)
Some officials at the Federal Reserve's June meeting favored raising the key policy rate by 25 basis points, according to FOMC minutes, which cited a still-tight labor market, stronger-than-expected economic activity, and persistently high inflation. On the other hand, "almost all participants judged it appropriate to maintain the target range at 5.00%-5.25% at this meeting" to give them more time to assess the impact of the tightening cycle on the economy. The minutes did little to move markets, with Wall Street's major averages ending slightly lower on Wednesday. "The Fed may have a more hawkish stance on the issue of raising interest rates than previously anticipated," said Investing Group Leader Daniel Jones. (74 comments)
Weekly movement
U.S. Indices
Dow -2% to 33,735. S&P 500 -1.2% to 4,399. Nasdaq -0.9% to 13,661. Russell 2000 -1.3% to 1,865. CBOE Volatility Index +9.1% to 14.83.
S&P 500 Sectors
Consumer Staples -1.1%. Utilities -0.2%. Financials -0.5%. Telecom -0.3%. Healthcare -2.9%. Industrials -1%. Information Technology -1.5%. Materials -2.%. Energy -0.7%. Consumer Discretionary -0.3%. Real Estate +0.5%.
World Indices
London -3.7% to 7,257. France -3.9% to 7,112. Germany -3.4% to 15,603. Japan -2.4% to 32,388. China -0.2% to 3,197. Hong Kong -2.9% to 18,366. India +0.9% to 65,280.
Commodities and Bonds
Crude Oil WTI +4.4% to $73.71/bbl. Gold +0.1% to $1,930.5/oz. Natural Gas -8.4% to 2.563. Ten-Year Bond Yield -0.2 bps to 4.066.
Forex and Cryptos
EUR/USD +0.54%. USD/JPY -1.55%. GBP/USD +1.05%. Bitcoin -1.1%. Litecoin -9.%. Ethereum -3.3%. XRP -1.4%.
Top S&P 500 Gainers
Fidelity National Information Services (FIS) +12%. Carnival Corporation & plc (CCL) +11%. Schlumberger (SLB) +10%. Global Payments (GPN) +9%. Bunge (BG) +9%.
Top S&P 500 Losers
NIKE (NKE) -8%. Generac Holdings (GNRC) -8%. Micron Technology (MU) -6%. MarketAxess Holdings (MKTX) -5%. Best Buy Co (BBY) -5%.
Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.
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Comments (6)
926
You are entirely correct ! I of course have no student loans so the only effect that it would have on me would have that burden of me paying off the loan of someone who made that commitment to attend a school of their choice. Having debt does teach responsibility and forgiving them teaches nothing. When the government made student loans available, the response of many Universities and colleges were to raise already higher cost to even higher. We all have our ideas as to why the loan forgiveness was attempted and while the many with such loans are disappointed. But I am not going to get into that ..allday
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