The S&P 500 Index and Nasdaq Composite both notched fresh closing highs on Friday as the latest job market reading boosted market optimism for coming interest rate cuts. The broader market index rose over 0.5% to settle at 5,567.19, while the tech-heavy Nasdaq advanced 0.9% to 18,352.76. The Dow Jones Industrial Average, meanwhile, joined the broader market rally, climbing nearly 70 points.
Here's how the market settled to close out the week:
S&P 500 Index
Dow Jones Industrial Average
Nasdaq Composite Index
Moving Markets:
The U.S. economy added slightly more than expected jobs in June, the Labor Department reported Friday, but the unemployment rate rose alongside the gains.
Nonfarm payrolls increased by 206,000 last month, down from May's downwardly revised gain of 218,000 but above Dow Jones estimates for a gain of 200,000. Meanwhile, the unemployment rate unexpectedly increase to 4.1%, marking its highest level since October 2021. The economist forecast called for the jobless rate to remain at 4% in June.
Much of the month's increase was due in part to an increase in government jobs, which grew by 70,000, followed by 49,000 adds for health care, while social services and construction advanced by 34,000 and 27,000, respectively. Several sectors saw losses in June, however, led by professional business services, down 17,000, and retail, which lost 9,000.
Renaissance Macro Research noted on Friday that June's jobs report signaled that Federal Reserve may have all the data they need to confidently cut interest rates in the near-term.
"This is not a close call," the firm wrote in a post on X, formerly known as Twitter, on Friday. "The unemployment rate is climbing & payroll growth is slowing. Conditions in the labor market are cooling off. The trade-offs for the Fed have shifted. If they don't cut this month, they ought to make a strong signal a cut is coming in September."
Market participants also weighed in following the jobs report, with 77% now pricing in a quarter-point rate cut at the central bank's September meeting, according to the CME Group's FedWatch Tool, up from 64% probability seen a week ago.
Still, the Federal Reserve should also be expected to maintain its hawkish monetary policy as it continues to support the recovering U.S. economy. Central bankers released the meeting minutes from their recent June policy meeting after market close on Wednesday, where participants "affirmed that additional favorable data were required to give them greater confidence that inflation was moving sustainably toward 2 percent," according to the minutes.
"Several participants observed that, were inflation to persist at an elevated level or to increase further, the target range for the federal funds rate might need to be raised," the minutes added. "A number of participants remarked that monetary policy should stand ready to respond to unexpected economic weakness."
