New York stock exchanges in a strong style have set new records of all time after a very poor report from the labor market. In the meantime, the topic of the July reduction in interest rates in the federal reserve has probably decisively decisive from the table.
New day, new record. The S & P500 index improved the record of all time for the second time in a row after last Friday he finally dealt with the February maximum. Benchmark ended a week at 6 279.35 points, increasing by 0.83%. On the occasion of Independence Day, Friday is a day without a session at Wall Street. In turn, the Thursday session was shortened by three hours.
The new peak was also designated by Nasdaq Composite, which, growing by 1.02%, reached a height of 20,601.10 points. For now, without a new record, the industrial average of Dow Jones remains, which on Friday went up by 0.77% and reached 44 828.53 points. Therefore, there is only 245 points to the record.
The nail of the investment program was transferred from Friday monthly data from the American labor market. It must be said clearly: objectively it was a very weak report. Employment in the private sector increased by only 74 thousand. full -time jobs, with a market consensus of 105,000 and 137 thousand recorded a month earlier. In addition, the average working time (from 34.3 to 34.2 hours a week) unexpectedly shortened, and the average hourly salary increased less than expected (0.2% MDM vs. 0.3%).
But investors preferred to think that the glass is half full, not almost empty. The June “Payrolls” saved that the total change in employment in non -agricultural sectors amounted to 147 thousand. full -time jobs, which is clearly more than the median forecasts of economists at the level of 110 thousand. And a bit more than the already poor result for May (+144 thousand after revision up). However, economists' forecasts were very low and were between 50,000 and 160 thousand new jobs.
However, even taking into account the lowest numbers, they were similar to the actual result. This is because the BLS report showed a slightly artificially (probably due to problems with seasonal equalization). full -time jobs. Without this statistical impulse, we would only receive +84 thousand. full -time jobs and then the report would probably be referred to as “weak”.
They were also happy with the surprising decrease in the unemployment rate, which decreased from 4.2% to 4.1%. This is a small sensation because the market consensus assumed its increase to 4.3%. However, if you look at the data, then the decrease in the unemployment rate resulted not, so many of the working number of working (by 93,000), but the increase in inactive numbers (+329 thousand). Apparently some of the unemployed (decrease by 222,000) were discouraged by looking for a job and joined the ranks of passive. And this is not good news.
But the market is not discussed. Since it was decided that the June “Payrolls” were good, they were. – The greatest implication of the employment report seems to be that it is not possible for the Fed to lower interest rates in July and the question of whether the interest rates will be reduced at all this year – he said in an interview with CNBC Jed Ellerbroek, a portfolio managing the portfolio at Argent Capital Management. And in fact: the chances of a July rate reduction in Feda have been practically reset – at least this is the result of the Fedwatch Tool calculations. The market cutting valuation in September was reduced from almost 94% to less than 65%.
It is interesting because the prospect of higher interest rates is not good information for the valuations of shares. So you can see how strange the Thursday's Wall Street reaction was. The dollar has survived, who intensively did their recent losses. The “improvement” was also reacted by the debt market, where there was a strong (almost +10 pb.) Growth of 2-year US government bonds. There was also gold, discounted by almost 1%. Everything is correct, except for increases on the stock market.
– We are observing a real tide of irrational euphoria. The stock market is distorted towards optimism – Kristina Hooper, the main managing in the New York Man Group, quoted by the Reuters agency. Hooper added, however, that there were fears, that the labor market report would be even worse.
