CNBC Daily Open: Wall Street disregards job losses to focus on cheaper shoes from Vietnam
The U.S. economy lost private sector jobs in June, the first time hiring had contracted since March 2023, according to payrolls processing firm ADP. It's even more startling because a Dow Jones survey of economists had pegged job numbers to expand by 100,000.
Meanwhile, U.S. President Donald Trump announced on his social media site Truth Social that the country had made a trade deal with Vietnam, in which the Southeast Asian nation will face a 20% duty on imports to America. That means companies that rely heavily on Vietnam for manufacturing, such as Nike, Crocs and Lululemon, will face less onerous costs and might not hike prices as much, compared with the original tariff rate of 46%.
After weighing both pieces of news, investors decided the good news was more important and lifted the S&P 500 to a new closing high. Granted, the ADP report has had a spotty track record in predicting the official job figures from the U.S. Bureau of Labor Statistics. But it's still worth thinking about how that's a sign financial markets could be slightly disconnected from the real economy: Who can afford to buy shoes and pump up stocks if they don't have jobs?
Vietnam strikes a deal with America. Imports from the Southeast Asian nation to the U.S. will be subject to a 20% tariff, while the U.S. gets tariff-free access to Vietnam's market, Trump announced Wednesday.
The S&P 500 rises to close at a fresh record. The index also scored an intra-day high, while the Nasdaq Composite notched a record close. The pan-European Stoxx 600 index added 0.18%. U.K. bond yields jumped on turmoil in the Labour Party.
The U.S. lost private sector jobs in June. Job losses amounted to 33,000, reported ADP on Wednesday. Economists polled by Dow Jones had expected an increase of 100,000 jobs for the month.
Tesla reports a fall in second-quarter deliveries. The Elon Musk-led company delivered 384,122 vehicles in that period, a drop of 14% from a year ago. But Tesla shares still rose as the numbers were better than some investors had feared.
[PRO] A weak jobs report could trigger a sell-off. If the numbers for June's nonfarm payrolls, out Thursday, is anything like the ADP report, the JPMorgan trading desk thinks U.S. stocks could tumble.
A slowing economy meets a fast future
Life in China these days is a story of stark contrasts. If in one conversation, my counterparts are wringing their hands over a sluggish economy, the next reveals how quickly artificial intelligence is revamping industries.
While China's biggest cities are yet to see a return to the pre-Covid boom days, there are signs that smaller ones are experiencing rapid growth.
Augmented reality glasses startup Xreal invested in its own factory in the southeastern "tier 2" city of Wuxi and earlier this year announced a new glasses product running Google's XR operating system.
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