Stocks Fall After Solid Jobs Data
2:56 pm Friday, June 03rd, 2022
The stock market stumbled out of the gate after the release of a stronger than expected jobs report for May, which did not contain anything to deter the Fed from its aggressive rate hike plans. Furthermore, the weak start was a reflection of overnight pressure on the futures market after it was reported that Tesla (TSLA) CEO Musk told company executives that he has a “super bad feeling ” about the economy and that Tesla’s workforce needs to be reduced by about 10%.
The warning from Mr. Musk sent Tesla to its lowest level in over a week, and Tesla’s underperformance has been instrumental in sending the consumer discretionary sector (-2.6%) to the bottom of today’s leaderboard.
Nine of the remaining ten sectors also trade in negative territory with technology (-2.2%) and communication services (-2.2%) sitting deep in the red while the energy sector (+1.2%) is the only advancer at this time.
Most components of the tech sector trade lower with Apple (AAPL) surrendering this week’s gain after Morgan Stanley cautioned that weak May revenue growth in the company’s App Store is setting the stage for a weaker than expected quarter for the company’s services division. Chipmakers are faring worse than the tech sector with Micron (MU) falling back below its 50-day moving average (72.09) after Piper Sandler downgraded the stock to Underweight with a $70 price target. The PHLX Semiconductor Index is down 2.6% with one of Micron’s main customers—NVIDIA (NVDA)—contributing to the underperformance.
Relative weakness in mega cap names has also weighed on the communication services sector, though the group is still up a slight 0.1% for the week.
On the upside, the energy sector (+1.3%) has spent the day in positive territory, continuing its show of relative strength. The sector has returned into the green for the week (+1.0%) thanks to support from a rising price of oil and gains in all but three of its components. WTI crude is up $2.21, or 1.9%, at $119.08/bbl, approaching its May high (119.98).
Treasuries widened their modest early losses after the release of the above-consensus jobs report for May, but intraday action has seen a rise off lows. The 10-yr yield is up five basis points at 2.96% after approaching 2.99% in early trade.
May nonfarm payrolls increased by 390,000 (consensus 325,000). The 3-month average for total nonfarm payrolls decreased to 408,000 from 516,000. April nonfarm payrolls revised to 436,000 from 428,000. March nonfarm payrolls revised to 398,000 from 424,000.
