The Dow Jones Industrial Average rebounded after an earlier loss following a much better-than-expected July jobs report, as investors assessed what a strong labor market would mean for the Federal Reserve’s rate-tightening campaign.
The Dow Jones Industrial Average lost just three points after dropping more than 200 points. Banking stocks led the intraday return as rates rose from the strong jobs report. The S&P 500 was flat after earlier losing about 1%. The Nasdaq Composite Index is down about 0.1%.
The labor market added 528,000 jobs in July, It easily beats the Dow Jones estimate with a 258,000 increase. The unemployment rate fell to 3.5%, below the 3.6% estimate. Wage growth also rose more than expected, up 0.5% for the month and 5.2% higher than last year, indicating that high inflation remains likely an issue.
Stocks opened lower after the report, even when it seemed like the economy wasn’t in a recession.
Art Hogan, chief market strategist at BP, said: Financial issues. “It’s clearly a situation where the economy is not screaming or heading into a recession here and now.”
Job growth was expected to slow as the Fed continues to raise interest rates to tame high inflation, but this report shows that the labor market remains brisk. This report is critical because it is one of two that the central bank will watch before deciding how much to raise interest rates at its September meeting.
The major averages posted their best month since 2020 in July on hopes that the Fed will slow the pace of its increases. The S&P 500 added 9.1% last month.
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”