Widespread Job Growth, Record 11 Year Expansion, Stocks Down On Rate Fears

July 5, 2019
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A booming jobs report follows the 4th

Strong Jobs Report

Jobs added in the U.S. for June hit 224,000, beating expectations of 160,000 by +64,000. After May's dour report, This strong showing heightened investor sentiment about the overall economy. By sector, gains were robust and widespread, except in retail, where a loss of 6,000 marks a fifth straight decline. The unemployment rate ticked up slightly to 3.666% from 3.62%, but the household survey of employment rose by 247,000, and the participation rate--the share of employed working-age people--moved higher to 62.9%.

Stocks Fall As 50 BP Cut Hopes Fade

The news on jobs erased investor hopes for a 50 basis point rate cut at the FOMC meeting on July 31st, therefore stocks fell slightly on the news, with the Dow, NASDAQ and S&P 500 all off roughly half a percent at time of writing. The CME's FedWatch tool has taken the probability of a 50 bp cut down to 8% from 32.3% a week ago.

Record American Expansion, Strong Dollar

The American economic expansion has reached the 11 year mark, setting an all-time record in the wake of the Great Recession. The new record coincides with a moment when all three major stock indexes are at, or very close to, all-time highs. At time of writing, the U.S. Dollar Index (DXY, USDX) has now broken through all three of its key metrics, the 50-, 100- and 200-day moving averages.

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