Employment Data Mixed on the Eve of Nonfarm Payrolls – US Market Wrap

Stocks fell ahead of US jobs data, which will determine the size of a Federal Reserve rate cut in September.

The S&P 500 retreated after a series of twists and turns. This is despite a rally in a few major tech stocks. Treasury yields fell slightly, with traders still pricing in over 100 basis points of Fed easing this year, implying a potentially massive reduction. Given Jerome Powell’s recent emphasis on the labor market, many Wall Street analysts believe Friday’s US payroll data will determine whether the Fed cuts by 25 or 50 basis points this month.

Economic data was mixed ahead of the much-anticipated Nonfarm Payrolls report. US services expanded at a modest pace, companies added the fewest jobs since the beginning of 2021, and unemployment claims fell short of expectations.

The S&P 500 fell below 5,500. The “Magnificent Seven” index of megacaps rose 1.3%. The Russell 2000 index of small firms fell 0.6%. Treasury 10-year yields fell three basis points, to 3.72%. The dollar fell.

Among corporate highlights, Nvidia rose, with Bank of America analysts citing the recent drop as an “enhanced” buying opportunity. Tesla accelerated plans to launch the driver assistant in China and Europe.