Job Creation Tumbles in July, Higher Unemployment Strengthens Case For Interest Rate Cuts: Is The Fed Slow On The Draw? (CORRECTED)
Portfolio Pulse from Piero Cingari
Job creation in the U.S. slowed significantly in July, with only 114,000 jobs added compared to 179,000 in June. The unemployment rate rose to 4.3%, and wage growth showed signs of cooling. These factors strengthen the case for potential interest rate cuts by the Federal Reserve. Market reactions included a drop in Treasury yields, a 0.7% decline in the U.S. dollar index, and significant losses in futures on U.S. indices.
August 02, 2024 | 12:37 pm
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NEGATIVE IMPACT
The Invesco QQQ Trust (QQQ) tumbled 2.6% as tech stocks reacted negatively to the weaker job creation and rising unemployment.
Weaker job creation and rising unemployment increase economic uncertainty, leading to a selloff in tech stocks, which heavily impacts QQQ.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
NEGATIVE IMPACT
The SPDR S&P 500 ETF Trust (SPY) fell 1.4% as futures on U.S. indices traded sharply lower due to rising risk aversion in equity markets.
The slowdown in job creation and rise in unemployment increase economic uncertainty, leading to a selloff in equity markets, which impacts SPY.
CONFIDENCE 88
IMPORTANCE 75
RELEVANCE 85
NEGATIVE IMPACT
The Invesco DB USD Index Bullish Fund ETF (UUP) fell 0.7% as the U.S. dollar index tumbled in response to weaker job creation and rising unemployment.
The decline in job creation and rise in unemployment increase the likelihood of interest rate cuts, which negatively impacts the U.S. dollar index and, consequently, UUP.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80