The Dow Jones industrial average rebounded from earlier losses on the back of a much better-than-expected July jobs report, as investors gauged what a strong labor market would be to the Federal Reserve’s rate-tightening campaign.
The Dow Jones industrial average was down just 3 points after falling more than 200 points. Bank stocks led an intraday comeback as rates rose from a strong jobs report. The S&P 500 was flat after earlier losing about 1%. The Nasdaq composite was down about 0.1%.
The labor market added 528,000 jobs in July. That easily beat the Dow Jones estimate of a 258,000 increase. The unemployment rate fell to 3.5%, down from an estimate of 3.6%. Wage growth also rose more than estimated, at 0.5% month-on-month and 5.2% higher than a year ago, indicating that high inflation is still a problem.
Stocks opened lower following the report, although it seemed to indicate that the economy is not currently in recession.
“Anyone who jumps at ‘the Fed is going to go ahead and start cutting rates next year’ should get off at the next station because that’s not in the cards,” said Art Hogan, chief market strategist at P. Riley Financial. is clear.”
Job growth was expected to slow as the central bank continues to raise interest rates to control rising inflation, but the report shows the labor market is still running hot. The report is important because it is one of two reports the central bank will look at before deciding how much to raise interest rates at its meeting in September.
The major averages posted their best month since 2020 in July on hopes that the Fed will slow its pace of hikes. The S&P 500 added 9.1% last month.
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