The Dow Jones Industrial Average rebounded from an earlier loss following a much better-than-expected July jobs report as investors gauged what a strong labor market would mean for the Federal Reserve’s rate tightening campaign.
The Dow Jones Industrial Average lost just 3 points after falling more than 200 points. Bank stocks led the intraday rally as rates rose on the back of the strong jobs report. The S&P 500 was flat after earlier losing about 1%. The Nasdaq Composite was down 0.1%.
The labor market added 528,000 jobs in July, easily beating a Dow Jones estimate of an increase of 258,000. The unemployment rate fell to 3.5%, below the estimate of 3.6%. Wage growth also rose more than expected, up 0.5% for the month and up 5.2% from a year ago, indicating that high inflation is likely to remain a problem.
Stocks opened lower after the report, although it appeared to indicate that the economy was not currently in recession.
“Anyone who jumped on the ‘Fed is going to turn around next year and start cutting rates’ will have to get off at the next station, because that’s not in the cards,” said Art Hogan, chief market strategist by B. Riley. financial “It’s clearly a situation where the economy is not screaming or going into recession here and now.”
Job growth was expected to slow as the Fed continues to raise interest rates to tame rising inflation, but this report shows the labor market is still hot. The report is crucial as it is one of two the central bank will see before deciding how much to raise rates at its September meeting.
The major averages posted their best month since 2020 in July on hopes that the Fed would slow the pace of its hikes. The S&P 500 rose 9.1% last month.