[New York Stock Market] Mixed Close on Strong Employment Data... Nasdaq Up 0.12%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York stock market showed mixed movements within a narrow range on Friday, the 8th (local time). Only the tech-heavy Nasdaq index closed higher. Amid ongoing concerns about an economic recession, stronger-than-expected employment data was released, reinforcing expectations that the Federal Reserve (Fed) will continue its aggressive tightening policy.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 31,338.15, down 46.40 points (0.15%) from the previous session. The large-cap S&P 500 index fell 3.24 points (0.08%) to 3,899.38. In contrast, the Nasdaq index rose 13.96 points (0.12%) to close at 11,635.31, marking its fifth consecutive day of gains.

By sector, some energy and healthcare stocks showed strength. Devon Energy closed up 1.51% from the previous session. Moderna also jumped 2.22%. Travel stocks declined. Caesars Entertainment dropped nearly 5%. Carnival fell more than 3%. Norwegian Cruise Line (-2.37%) and Royal Caribbean (-2.99%) also closed lower.

GameStop slid nearly 5% following the resignation of its Chief Financial Officer (CFO) and announcements of layoffs. Twitter closed down 5.10% amid concerns that Elon Musk, CEO of Tesla, might fail to acquire the company.

Investors closely watched the employment report and movements in Treasury yields on this day.The U.S. Department of Labor reported that nonfarm payrolls increased by 372,000 in June, significantly exceeding the market expectation of a 250,000 increase. The June unemployment rate stood at 3.6%, nearly the lowest in 50 years. Despite repeated recession warnings, the robust U.S. employment data surpassing expectations has led to forecasts that the Fed will accelerate its rate hike path.

According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds (FF) futures market reflected a 93% probability of a giant step (0.75 percentage point hike) in July. This is higher than the 86.2% probability a week ago. Raphael Bostic, President of the Federal Reserve Bank of Atlanta, appeared on CNBC that day and expressed support for a 0.75 percentage point rate hike. The previous day, Fed Governor Christopher Waller and James Bullard, President of the St. Louis Fed, also voiced support for a 0.75 percentage point increase.

Following the employment report release, Treasury yields in the New York bond market surged sharply in support of the rate hike. The 10-year Treasury yield briefly rose to around 3.10% during the session before settling at 3.8%. The 2-year yield, which is sensitive to monetary policy, hovered around 3.11%. However, the inversion phenomenon, where the short-term 2-year yield remains higher than the 10-year yield, was also observed. Such a yield curve inversion is generally considered a precursor to a recession, fueling further market concerns.

Ma Young-yu of BMO Wealth Management said, "Some of the severe recession concerns have somewhat retreated," analyzing that the rise is due to the employment report and recent declines in commodity prices, which have increased the possibility of a soft landing for the U.S. economy. Michael Schumacher, Head of Macro Strategy at Wells Fargo, said, "The employment growth is quite strong," adding, "A 0.75 percentage point rate hike in July seems indisputable."

Oil prices continued to rise on rebound buying. On the New York Mercantile Exchange, August West Texas Intermediate (WTI) crude oil closed at $104.79 per barrel, up $2.06 (2.01%) from the previous session. Earlier, WTI had fallen below the $100 per barrel mark but has dropped 3.36% just this week.