Stock futures fell Friday after the July jobs report was much better than expected, showing a strong labor market that will likely mean more interest rate hikes from the Federal Reserve.
Futures on the Dow Jones Industrial Average slipped 222 points or 0.68%. S&P 500 futures lost 1.05% and Nasdaq 100 futures shed 1.43%.
The labor market added 528,000 jobs in July, easily beating a Dow Jones estimate of a 258,000 increase. The unemployment rate also ticked down to 3.5%, below the 3.6% estimate. Wage growth also ticked up more than estimated, up 0.5% for the month and 5.2% higher than a year ago, signaling that high inflation is likely still a problem.
“Anybody that jumped on the ‘Fed is going to pivot next year and start cutting rates’ is going to have to get off at the next station, because that’s not in the cards,” said Art Hogan, chief market strategist at B. Riley Financial. “It is clearly a situation where the economy is not screeching or heading into a recession here and now.”
Job growth was expected to slow as the Fed continues to hike interest rates to tame surging inflation, but this report shows a labor market still running hot. The report is a crucial one as it’s one of two the central bank will see before it decides how much to raise rates at its September meeting.
The S&P 500 is up a modest 0.5% on the week, attempting to post a three-week winning streak. The blue-chip Dow has dipped 0.4% this week, while the tech-heavy Nasdaq Composite has outperformed, up 2.7% on the week.