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  • Writer's pictureRealFacts Editorial Team

S&P 500 Notches 34th Record High on Raising Unemployment

man at the stock market

Early Friday, June’s jobs report showed that unemployment has risen to 4.1%, the highest level since late 2021. Despite this, hiring slightly exceeded expectations, with a total of 206,000 jobs gained, compared to the forecasted 189,000. Under the surface, private-sector employers added only 136,000 jobs, while government jobs increased by 70,000. The private sector was predicted to add 160,000 jobs, showing a miss in private-sector job growth. Additionally, hiring gains for April and May were revised down by 111,000 jobs, indicating a further slowdown in job growth. 

The rising unemployment and slowing job growth indicate economic softness that may push the Federal Reserve to cut interest rates sooner than many investors have been anticipating. Additionally, average hourly earnings rose by 0.3% in June, leading to a twelve-month wage growth of 3.9%, the slowest since June 2021. Jed Graham, an author for Investors Business Daily, reported on the effects of the jobs report on investors' sentiment, highlighting increased expectations for potential rate cuts this year. 

He wrote, “After the June jobs report, markets were pricing in 78% odds of a rate cut by the Sept. 18 Fed meeting, up from 73%, according to CME Group's FedWatch page. Markets now see 75% odds of at least two quarter-point Fed rate cuts by the year's final meeting on Dec. 18, up from 70%. Odds that the second rate cut could come at the Nov. 7 Fed meeting rose to 37% from 31%. Markets also now see higher odds of 75 basis points in rate cuts this year (29%) than just a single quarter-point cut (25%).” With the odds of rate cuts rising, the S&P 500 reacted positively, increasing by 0.5% on Friday and marking a 17% rise year-to-date.


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