Stocks fell on Friday, and finished lower for the week, as Wall Street struggled to shake off fears that the Federal Reserve may start hiking rates again later this month.
The S&P 500 lost 0.29% to end at 4,398.95, while the Nasdaq Composite dipped 0.13% to close at 13,660.72. The Dow Jones Industrial Average dropped 187.38 points, or 0.55%, to settle at 33,734.88.
All three major averages capped a losing week. The S&P dropped 1.16%, while the Nasdaq declined 0.92%. The Dow shed 1.96% for its worst weekly performance since March.
The Labor Department’s June jobs report showed payrolls increased less than expected, cooling down from May. Nonfarm payrolls rose by 209,000, while the unemployment rate came in at 3.6%. Economists polled by Dow Jones had anticipated 240,000 positions added and a similar jobless level.
But parts of the report, including stronger-than-expected wage numbers, heightened fears that the central bank may have reason to resume hiking later this month. Average hourly earnings increased by 0.4% in June and 4.4% from a year ago. Meanwhile, the unemployment rate declined from 3.7% in May.
“It’s kind of a mixed picture today,” said Truist’s Keith Lerner. “It’s good news that the economy is not falling apart, it’s still chugging along, but you still have these wage pressures that are going to keep the Fed likely to raise rates at the end of the month.”
Near term, Lerner said equities are ripe for a pullback following a big June and second quarter. This could lead to consolidation and choppy action as markets head into earnings season.
Following Friday’s big data release, traders kept their bets on a resumption in hiking later this month, pricing in a 92% chance of a quarter-point hike on July 26. Those are about the same odds as a day ago, according to CME Group’s FedWatch tool. Policymakers indicated at their June gathering that two more rate hikes could be ahead in 2023.
