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CNBC
03-07-2025
- Business
- CNBC
What Wall Street is saying about the stronger-than-expected jobs report
Wednesday's private payrolls report from ADP had the Street on edge heading into Thursday's release of the government' nonfarm payrolls number. Investors can breathe easier now. The U.S. economy added 147,000 jobs in June, topping a Dow Jones consensus forecast of 110,000. The unemployment rate also ticked down to 4.1%, while economists had expected an increase to 4.3%. The numbers came one day after ADP reported that U.S. private payrolls decreased by 33,000 jobs last month, raising concern that the government's figures would reflect a much more dire economic picture. Stock futures popped Thursday after 8:30 a.m. ET but quickly pared those gains. S & P 500 and Nasdaq-100 futures were last up around 0.1%, along with those tied to the Dow Jones Industrial Average. Gains were likely capped because the positive report lowers the probability of a Federal Reserve rate cut later this month. Here's what some strategists and investors on Wall Street had to say about the latest U.S. employment report: Joe Gaffoglio, President and CEO at Mutual of America Capital Management: "The June jobs report continues to demonstrate resilience across the labor market, even as certain sectors such as manufacturing continue to lag. The unemployment rate is holding steady at 4.1%, and real average hourly earnings for employees experienced its largest increase of the year." Ian Lyngen, head of U.S. rates at BMO: "Overall, it was a strong set of data that implies the Fed will remain on hold later this month, leaving rate cut expectations focused on the September FOMC meeting." Jeffrey Roach, chief economist at LPL Financial: "If businesses keep expanding payrolls like they've done so far this year, the Fed can comfortably sit in 'wait and see' mode at the upcoming policy meeting. Uncertainty around tariffs and trade have apparently not spooked businesses into shedding workers." Simon Dangoor, head of fixed income macro strategies at Goldman Sachs Asset Management: "Today's stronger jobs report confirms a still resilient U.S. labor market, defying, at least for now, the signs of weakness seen in some leading indicators. The FOMC's conviction that it should hold its wait-and-see stance while it braces for an acceleration in inflation over the summer will only be strengthened. But we still see a path to a resumption of the Fed's easing cycle later in the year should the summer acceleration in inflation prove more modest than expected." Allison Schrager, senior fellow at the Manhattan Institute, in a CNBC " Squawk Box " interview: "I feel like we keep looking for the shoe to drop, but we keep getting good reports. It's not just this employment report, it was also JOLTS. It's also inflation. And for right now, the economy looks pretty strong. It's still keeping on, keeping on, despite all this uncertainty, despite all this tariffs. I guess we can't explain it, but at the very least, I don't see how the Fed could justify cutting rates right now." Eric Merlis, co-head of global markets at Citizens: "The labor market remained resilient in June despite tariff uncertainty and elevated geopolitical concerns. Wages also proved stable and showed no signs of accelerating despite the improvement in the unemployment rate. The stability in labor conditions should give the Fed leeway to maintain its wait-and-see stance until it has greater clarity about how evolving policies may impact the economy." Jeff Schulze, head of economic and market strategy at ClearBridge Investments: "The solid June jobs report confirms that the labor market remains resolute and slams the door shut on a July rate cut. Today's report saw a trifecta of positives that should send the labor bears back into hibernation: a drop in the unemployment rate, a solid beat on headline job creation vs. consensus and positive revisions to the prior two months. Softer average hourly earnings (wage) gains suggest that a wage-price inflationary spiral shouldn't be a near-term concern, setting up something resembling a goldilocks scenario." Bradley Saunders, North America economist at Capital Economics: "Despite a 200,000 increase in the population, the labour force declined by 130,000 last month, suggesting that ICE raids may be keeping immigrants away from work. Paired with the 93,000 gain in the household measure of employment, this meant the unemployment rate fell back to 4.1% – its lowest since the start of the year. We expect this to be a running theme over the next few months, as lower immigration reduces the number of new jobs the economy needs to add in order to keep a lid on the unemployment rate." Thomas Simons, chief U.S. economist at Jefferies: "We had thought that soft payroll data would open the door for a July rate cut, and an increased probability in market pricing for as many as 4 rate cuts in 2025. This data isn't enough to shift the consensus as it provides enough mixed details for investors and policymakers to cherry-pick supports for their pre-existing narratives. We take the overall view that the data is soft, but the market is correct to hold steady on pricing for rate cuts, especially since the CPI data due out on July 15 is likely to be firmer than what we have seen in recent months." Lara Castleton, U.S. head of portfolio construction and strategy at Janus Henderson Investors: "These numbers demonstrate economic resilience despite expectations for slowdowns on the backs of tariff and fiscal uncertainty. While many will not want to believe this solidifies a strong labor market, especially on the backs of a negative ADP print, what this print does solidify is the Fed does not have the data to contemplate a cut in July." Roger Ferguson, former Fed vice chair, on "Squawk Box:" "This is an economy that's driven by the service sector that still seems healthy. So overall, this is a check plus. This is a good labor market report." Chris Zaccarelli, chief investment officer for Northlight Asset Management: "Given the strong jobs numbers along with the extension of tax cuts and potentially higher tariff levels (once the 90-day pause expires), the Fed is much less likely to cut rates this month than many were talking about earlier this week." — CNBC's Alex Harring, Brian Evans, Jesse Pound, Sarah Min, John Melloy and Christina Cheddar-Berk contributed reporting.
CNBC
02-07-2025
- Business
- CNBC
What Wall Street has to say about the horrid June private payrolls report
ADP's latest surprise report was not on anyone's bingo card. Private payrolls fell by 33,000 in June , the company said Wednesday. Economists polled by Dow Jones expected an increase of 100,000. The report marks the first time since March 2023 that ADP reported a contraction in private payrolls. The data took the wind out of the market's sails in early morning trading. S & P 500 futures gave up their slight gains and were slightly lower following the release. Nasdaq-100 futures were also down 0.3%. To be sure, ADP's track record for predicting the U.S. government's monthly jobs report isn't great — giving investors hope that Thursday's June nonfarm numbers payrolls from the Bureau of Labor Statistics won't be as bad as ADP's figures released Wednesday. The economy is expected to have added 110,000 nonfarm payrolls, according to economists polled by Dow Jones. Here's what some Wall Street investors and strategists had to say about Wednesday's ADP figures: Ian Lyngen, head of U.S. rates at BMO: "The negative print was a clear downside surprise versus the +98k consensus. This is the first negative print since March 2023, and second negative print since the early stages of the pandemic. Overall, it was a disappointing jobs proxy that sets up tomorrow's BLS release as a major wildcard." Peter Boockvar, chief investment officer at Bleakley Financial: "I wasn't planning on writing this week but felt the need right now after seeing the ADP private sector jobs report … I'll say again, a blanket 10% tariff on all incoming imports of goods just loaded about $330b of fresh taxes on American importers (yes, some are absorbed by the exporter) which has the effective impact of raising the corporate income tax rate to 34% from 21%." Liz Ann Sonders, chief investment strategist at Charles Schwab: "Ouch: June @ADP payrolls -33k vs. +98k est. & +29k prior (rev down from +37k) … first monthly decline since March 2023 ." Peter Berezin, chief global strategist at BCA Research: "Remember: ADP is a bad predictor of nonfarm payrolls … mainly because nonfarm payrolls are a bad predictor of what is actually happening to payrolls." Guy LeBas, chief fixed income strategist at Janney: "Your monthly reminder: surprises in the ADP employment change are uncorrelated with surprises in NFPs. But this doesn't look great ." — CNBC's Alex Harring and Yun Li contributed reporting.
Mint
26-06-2025
- Business
- Mint
The S&P 500 is eyeing a new record. Why the bond market still holds power.
The S&P 500 is not far from marking a new record close, yet investors may not be feeling very enthusiastic. The index appears rich: Investors are still paying a nearly three-year-high multiple for anticipated future profits, making stocks particularly vulnerable to negative surprises. U.S. economic growth has been sufficient, but tariffs, along with geopolitical conflicts in the Middle East and elsewhere, raise the specters of higher prices and slower growth—which could spur stagflation. Analysts are worried that such a scenario could negatively hit company profits as consumers spend less. The bond market, meanwhile, has gotten lost in the list of market worries. Investors should pay attention—they may still pack a punch. True, bonds haven't done much in June. The yield on the 10-year Treasury note has oscillated in a 25-basis-points range over the last 20 trading days, the smallest range over a one-month period since fall 2024, wrote BMO Capital Markets strategists Vail Hartman and Ian Lyngen in a note. If the yield on the 10-year pushes much higher, stock prices are expected to take a hit: When yields are elevated, investors often move money to bonds, which are less-risky and offer better returns. But it doesn't need to always play out that way. The stock market's reaction to bond yields will be driven by the underlying reasons for the rise, not just the absolute yield numbers. Higher yields due to better-than-expected economic growth are good news for companies' profits, and in turn, their stocks. However, higher yields due to more term premium—which measures the extra yield investors demand to stash away money for a decade, rather than just repeatedly investing in short-term securities—signal economic uncertainty and can hurt stocks. Term premium is now adding 70 basis points onto the yield for the 10-year. Term premium is driven by myriad factors, including market supply and demand for bonds, central bank policies, and uncertainty about government regulations. The relative impact of each of these factors is hard to measure and can shift over time. Term premiums are not observable and cannot be traded. People have models for rough bearings, but there's inherent uncertainty around the estimates, wrote Benson Durham, Piper Sandler's head of global policy and asset allocation, in a Wednesday note. Wars, for example, increase the supply of U.S. Treasuries—but investors will find the supply less threatening if there's demand for these notes. If the demand from investors looks weak, the term premium will move higher at some point to reflect this mismatch in supply and demand. 'There's certainly a threshold that we think of with regard to how big those negative supply shocks have to be to for these things to get priced immediately, which I think would be a serious bear market in equities, and would cause a genuine rise in term premium," Freya Beamish, Chief economist at TS Lombard, told Barron's Uncertain economic policies that change too quickly can also raise term premium—especially if more slow-moving investors like pension funds and insurers, who plug in money on longer-dated bonds, retreat. 'My point is this—if you want an answer as to how [5% yield on the 10-year Treasuries] might affect the S&P 500, much more background is required, even if a story, Durham wrote. 'And no one can ever be too sure." Write to Karishma Vanjani at
Yahoo
11-06-2025
- Business
- Yahoo
Wall Street on Edge: Inflation Spike, $58B Debt Test, and Trade Turmoil Collide
Wall Street is holding its breath as two market-moving forces line up: inflation and debt. Investors are watching closely as the U.S. and China restart trade talks in London, aiming to ease tensions and avoid another round of tariff escalations. Meanwhile, a $58 billion Treasury auction could test demand for U.S. debt at a time when long-end yields hover near 5%a level many thought would spark broader market reactions. BMO's Ian Lyngen calls this week's combo of May CPI and Treasury supply a tradable event, with core inflation expected to accelerate to 2.9% year-over-yearthe first uptick of the year. The S&P 500 (SPY) sits roughly 2% from its February peak, but volatility could return fast depending on how these numbers land. Warning! GuruFocus has detected 5 Warning Sign with META. Despite the rebound from April's tariff-driven slide, institutional investors have yet to jump back into equities in full force. Deutsche Bank notes that institutional positioning has been this low less than a quarter of the time since 2010. JPMorgan and Barclays, however, suggest the tide could be turning, with more big money managers set to ramp up equity exposure. That shift hasn't shown up yetBank of America's clients were net sellers last week, with institutions pulling out while hedge funds and retail buyers stepped in. Strategist Jill Carey Hall thinks the market may have already priced in much of the deglobalization risk, but not the potential upside from underappreciated tax policy tailwinds. On the corporate front, action is heating up. Tesla (NASDAQ:TSLA) isn't grabbing headlines today, but its peers are moving fast. Meta's (NASDAQ:META) CEO Mark Zuckerberg is going all-in on artificial general intelligence, quietly assembling a powerhouse team to build out the next big wave in AI. Boeing (NYSE:BA) just secured its biggest monthly order tally in over a yearmuch of it inked during President Trump's trip to the Middle East. Cisco (NASDAQ:CSCO) is rolling out new AI-powered upgrades across its networking portfolio to stay competitive in the enterprise race. Taiwan Semiconductor (NYSE:TSM) posted a 40% revenue surge in May as chipmakers rushed to build inventory ahead of potential trade roadblocks. Not everything was rosyMcDonald's (NYSE:MCD) was slapped with a rare sell rating from Redburn Atlantic, and Citigroup (NYSE:C) is preparing to book hundreds of millions more in loan loss provisions, signaling early cracks in consumer credit health. This article first appeared on GuruFocus.
Yahoo
10-06-2025
- Business
- Yahoo
Wall Street on Edge: Inflation Spike, $58B Debt Test, and Trade Turmoil Collide
Wall Street is holding its breath as two market-moving forces line up: inflation and debt. Investors are watching closely as the U.S. and China restart trade talks in London, aiming to ease tensions and avoid another round of tariff escalations. Meanwhile, a $58 billion Treasury auction could test demand for U.S. debt at a time when long-end yields hover near 5%a level many thought would spark broader market reactions. BMO's Ian Lyngen calls this week's combo of May CPI and Treasury supply a tradable event, with core inflation expected to accelerate to 2.9% year-over-yearthe first uptick of the year. The S&P 500 (SPY) sits roughly 2% from its February peak, but volatility could return fast depending on how these numbers land. Warning! GuruFocus has detected 5 Warning Sign with META. Despite the rebound from April's tariff-driven slide, institutional investors have yet to jump back into equities in full force. Deutsche Bank notes that institutional positioning has been this low less than a quarter of the time since 2010. JPMorgan and Barclays, however, suggest the tide could be turning, with more big money managers set to ramp up equity exposure. That shift hasn't shown up yetBank of America's clients were net sellers last week, with institutions pulling out while hedge funds and retail buyers stepped in. Strategist Jill Carey Hall thinks the market may have already priced in much of the deglobalization risk, but not the potential upside from underappreciated tax policy tailwinds. On the corporate front, action is heating up. Tesla (NASDAQ:TSLA) isn't grabbing headlines today, but its peers are moving fast. Meta's (NASDAQ:META) CEO Mark Zuckerberg is going all-in on artificial general intelligence, quietly assembling a powerhouse team to build out the next big wave in AI. Boeing (NYSE:BA) just secured its biggest monthly order tally in over a yearmuch of it inked during President Trump's trip to the Middle East. Cisco (NASDAQ:CSCO) is rolling out new AI-powered upgrades across its networking portfolio to stay competitive in the enterprise race. Taiwan Semiconductor (NYSE:TSM) posted a 40% revenue surge in May as chipmakers rushed to build inventory ahead of potential trade roadblocks. Not everything was rosyMcDonald's (NYSE:MCD) was slapped with a rare sell rating from Redburn Atlantic, and Citigroup (NYSE:C) is preparing to book hundreds of millions more in loan loss provisions, signaling early cracks in consumer credit health. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
