U.S. Stocks Rise as Weak June Jobs Report Cools Rate Hike Fears

TLDR

• The U.S. economy added just 57,000 jobs in June, well below the 113,000 expected by economists.
• The Dow, S&P 500, and Nasdaq all rose after the report, with the Dow gaining around 0.7%.
• The unemployment rate fell slightly to 4.2%, against the 4.3% forecast.
• Fed Chair Kevin Warsh told markets to look at data, not the Fed, to gauge where rates are headed.
• Odds of rates staying on hold through year-end rose to 21.7%, according to the CME FedWatch Tool.

U.S. stocks climbed on Thursday after a weaker-than-expected June jobs report gave investors reason to believe the Federal Reserve may hold off on raising interest rates.

The Dow Jones Industrial Average rose around 370 points, or 0.7%. The S&P 500 gained 0.6%, and the Nasdaq Composite was up 0.5% in early trading.

Jobs Report Misses Forecasts

The Labor Department reported the U.S. economy added 57,000 jobs in June. Economists had expected 113,000. That was a sharp slowdown from the previous three months.

The unemployment rate came in at 4.2%. Forecasters had expected it to hold at 4.3%, so the dip was a mild surprise.

The cooler jobs number ended what had been a three-month run of strong hiring data. It also shifted the conversation around the Fed’s next move.

Federal Reserve Chair Kevin Warsh recently told Wall Street to focus on economic data rather than waiting for guidance from the central bank. Thursday’s report gave traders something concrete to react to.

Chris Zaccarelli, chief investment officer at Northlight Asset Management, said the slower job growth could push more hawkish Fed officials to reconsider raising rates quickly.

Odds of rates staying steady through the end of the year rose to 21.7%, according to the CME FedWatch Tool. Traders still see at least one rate hike as possible later in 2025.

Treasury yields moved after the data. The 2-year yield fell to 4.15%, while the 10-year yield edged up to 4.49%. The dollar also weakened.

Tech Stocks Face Pressure From Chipmaker Selloff

While broader markets rose, tech stocks faced some pressure. The Nasdaq lagged behind the Dow and S&P 500 throughout the session.

A selloff in South Korean chipmakers weighed on sentiment. The Kospi index dropped 7.9%. SK Hynix fell over 14%, and Samsung Electronics dropped more than 9%. Both companies had recently announced large AI investment plans.

Microsoft shares bucked the trend in tech, rising despite weakness elsewhere in the sector.

Oil prices dipped after Qatar, which is mediating U.S.-Iran nuclear talks, said this week’s discussions were constructive. No deal was reached, but the tone was seen as positive.

With U.S. markets set to close Friday for Independence Day, some traders may be repositioning ahead of the long weekend.

The S&P 500 was trading at 7,501 as of midday. The Dow was at 52,757. The Nasdaq stood at 25,992.

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