New York Stock Market Slightly Up Amid Weak Employment Data... Focus on FOMC Minutes

US Continued Unemployment Claims Highest in 31 Months
June Private Employment Increases by 150,000...Third Consecutive Month of Decline
July 4 Independence Day Market Holiday...Closes at 1 PM on the Day
June FOMC Minutes Released at 2 PM

The three major indices of the U.S. New York stock market showed a slightly positive trend in early trading on the 3rd (local time). The market is digesting the weak employment data released that morning while awaiting the minutes of the June Federal Open Market Committee (FOMC) meeting to be released in the afternoon.

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As of 9:33 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was trading at 39,390.46, up 0.15% from the previous close. The S&P 500, which is centered on large-cap stocks, rose 0.07% to 5,512.94, and the tech-heavy Nasdaq index was up 0.03% at 18,034.21.

By individual stocks, Paramount Global surged 8.59%. Buying interest surged following news that U.S. Hollywood production company Skydance Media reached a preliminary agreement to merge with National Amusements, the controlling shareholder of Paramount Global. Tesla rose 2.33% after its Q2 vehicle delivery numbers exceeded analyst expectations. Nvidia fell 0.33%.

The employment data released that day confirmed consecutive signals of cooling in the U.S. labor market.

According to the U.S. Department of Labor, the number of continuing unemployment claims, which are filed by those claiming unemployment benefits for at least two weeks, increased by 26,000 to 1,858,000 in the week of June 16-22 compared to the previous week. This marked the highest level since November 2021 (1,878,000) for the second consecutive week. Moreover, continuing claims have risen for nine consecutive weeks, marking the longest increase since 2018 in six years.

New unemployment claims for the week of June 23-29 were 238,000. This exceeded both the expert forecast of 234,000 and the previous week's figure of 234,000. The 4-week moving average of unemployment claims, which smooths out volatility to better capture trends, rose by 2,250 to 238,500 compared to the previous week.

Private sector employment growth in the U.S. also declined for the third consecutive month last month. According to ADP, a private labor market research firm, private sector job additions in June increased by 150,000. This was below the market expectation of 163,000 and also less than May's 157,000. Wages for employees who stayed at the same job over the past 12 months rose 4.9% year-over-year, the lowest level since August 2021. Wage growth for job switchers also slowed to 7.7%.

Bloomberg reported, "More people are struggling to find new jobs," and analyzed that "as borrowing costs rise, the economy is slowing, and labor demand is gradually becoming more limited."

A more accurate picture of the U.S. labor market will be revealed in the Labor Department's employment report to be released on the 5th. Experts expect nonfarm payrolls to have increased by 189,000 last month, a significant slowdown from the previous month's 272,000. The unemployment rate is expected to remain steady at 4%.

The New York stock market will close early at 1 p.m. on the 3rd ahead of the U.S. Independence Day holiday on the 4th. One hour after the market closes, at 2 p.m., the minutes of the June FOMC meeting will be released. With the Fed having reduced its forecast for the number of rate cuts this year from three to one, market participants will look to see what opinions were exchanged among officials and seek clues about the future path of interest rates.

Earlier, Fed Chair Jerome Powell reaffirmed a cautious stance on rate cuts while mentioning progress on inflation. Powell attended a panel discussion at the European Central Bank (ECB) annual forum in Sintra, Portugal, and said, "We have made significant progress in bringing inflation down to target, which suggests we are on a disinflationary path," but added, "Before embarking on easing policies, we want greater confidence that inflation is sustainably moving toward the 2% target."

U.S. Treasury yields fell amid growing expectations of rate cuts due to weak employment data. The 10-year U.S. Treasury yield, a global bond yield benchmark, traded down 3 basis points (1 bp = 0.01 percentage points) from the previous session to 4.39%. The 2-year Treasury yield, sensitive to monetary policy, remained steady at 4.73%.

International oil prices moved within a narrow range. West Texas Intermediate (WTI) crude rose $0.10 (0.12%) from the previous session to $82.91 per barrel, while Brent crude, the global oil price benchmark, increased $0.06 (0.07%) to $86.30 per barrel.