A crucial jobs report meets a stock market at all-time highs: What to know this week

Yahoo

20 hours ago

The S&P 500 (^GSPC) is back at an all-time high for the first time since February as optimism around Federal Reserve interest rate cuts and fading fears of tariffs have driven stocks higher.
In the final full trading week of June, the S&P 500 rose 3.5%, while the Nasdaq Composite (^IXIC) rose more than 4.1%. Both indexes ended the week at all-time highs. Meanwhile, the Dow Jones Industrial Average (^DJI) added about 3.8%.
The June jobs report will headline the first week of July. Fresh readings on job openings and wage data, as well as manufacturing and services activity, will also be in focus for investors.
Investors will also have a close eye on any updates regarding President Trump's various tariff pauses ahead of the administration's self-imposed tariff delay deadline on July 9.
Markets will close at 1 p.m. on Thursday and remain shut on Friday for the Fourth of July.
Markets are increasingly optimistic that the Federal Reserve may cut interest rates soon. As of Friday, markets were pricing in an 18.6% chance the central bank cuts interest rates at its next meeting in late July, up from a 14.5% chance seen last week, per the CME FedWatch Tool. Meanwhile, probability investors are placing on a cut by the end of September has surged, with markets now pricing in a 93% chance the central bank will have lowered rates by then, up from a 70% chance seen just a week ago.
The shift comes as several Fed officials have alluded to the possibility of cutting interest rates as soon as the central bank's July meeting.
In a speech on June 23, Federal Reserve governor Michelle Bowman noted that although the labor market is showing signs of strength, it "appears to be less dynamic."
"With inflation on a sustained trajectory toward 2%, softness in aggregate demand, and signs of fragility in the labor market, I think that we should put more weight on downside risks to our employment mandate going forward," Bowman said.
However, Fed Chair Jerome Powell has been more cautious about interest rate cuts. While testifying in front of House lawmakers last week, Powell stressed that the central bank is "well-positioned to wait" before moving interest rates.
EY chief economist Greg Daco told Yahoo Finance he believes the Fed will likely cut in September.
"By then we will have seen more demand erosion, we will have seen a labor market that unfortunately has slowed and income growth as a result has slowed, leading to slower consumer spending activity," Daco said.
Signs of cooling in the labor market have been a key part of the brewing debate over Fed policy and will put further emphasis on the incoming June jobs report, due out for release at 8:30 a.m. ET on Thursday.
Economists expect the report to show 116,00 nonfarm payrolls were added, a move lower from the 139,000 seen in May. The unemployment rate is anticipated to have moved up to 4.3% from 4.2% the month prior.
"We expect the moderation in hiring to continue," Wells Fargo's team of economists led by Jay Bryson wrote in a note to clients on Friday. " Demand for new workers remains muted amid still-elevated uncertainty, restrictive monetary policy and the ongoing federal government hiring freeze."
The S&P 500's most recent record close comes as the market has rallied more than 23% from its April 8 bottom. Now, strategists believe the market's largest tariff fears are behind investors. Economic forecasts have once again begun reverting higher, along with projections for corporate earnings this year. And Wall Street strategists are becoming incrementally bullish on the outlook from here.
As our chart below shows, the S&P 500 has chugged past a slew of headwinds to hit a record high this year.
"The market still does tend to have a bullish sentiment to it," Charles Schwab head of trading and derivatives strategist Joe Mazzola told Yahoo Finance. "So I think you're seeing investors looking for those opportunities on pullbacks to buy in."
Weekly Calendar
Earnings: No notable earnings releases.
Economic data: MNI Chicago PMI, June (42.7 expected, 40.5 prior); Dallas Fed manufacturing activity
Earnings: Constellation Brands (STZ)
Economic data: JOLTS Job Openings, May (7.26 million expected, 7.39 previously); ISM manufacturing, June (48.8 expected, 48.5 prior); Construction spending month-over-month, May (+0.1% expected, -0.4% prior); Dallas Fed services activity (-10.1 prior); S&P Global US manufacturing PMI, June (52 expected, 52 prior)
Wednesday
Earnings: No notable earnings.
Economic data: MBA Mortgage Applications, week ending June 27 (+1.1% previously); ADP employment change, June (90,000 expected, 37,000 expected); S&P Global US services PMI, May final (52.3 expected, 52.3 prior); Challenger job cuts year-over-year, May (+62.7% prior)
Earnings: No notable earnings
Economic data: Nonfarm payrolls, June (+110,000 expected, +129,000 previously); Unemployment rate, June (4.3% expected, 4.2% previously); Average hourly earnings, month over month, June (+0.3% expected, +0.4% previously); Average hourly earnings, year over year, June (+3.8% expected, +3.9% previously); Average weekly hours worked, June (34.3 expected, 34.3 previously); Labor force participation rate, June (62.5% expected, 62.4% previously); Initial jobless claims week ending June 28 (240,000 expected, 236,000 prior); Continuing claims week ending May 24 (1.91 million prior); Nonfarm productivity, first quarter final (-0.8% expected, -0.8% prior); Unit labor costs, first quarter final (+5.7% expected, +5.7% prior); S&P Global US Composite PMI, June final (52.8 prior); ISM Services index, June (50.7 expected, 49.4prior); Federal Reserve Beige Book released; Durable goods orders, May final (16.4% prior)
Markets are closed for the Fourth of July.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.