Wall Street gyrates to muted close as investors weigh jobs data in rate debate

[July 09, 2022]  By David French

(Reuters) - Wall Street ended little changed on Friday after a volatile session in which investors tried to comprehend how a robust jobs report would influence the U.S. Federal Reserve and its plans to aggressively hike interest rates.

Despite the bumpy nature of the day though, the Nasdaq posted its fifth straight gain - its longest winning streak since the beginning of November - and all three benchmarks finished solidly up for the week shortened by the Independence Day holiday.

The Labor Department's closely awaited data showed nonfarm payrolls rose by 372,000 jobs in June, higher than the estimated rise of 268,000 jobs, according to a Reuters poll of economists.

The report also showed the jobless rate remained near pre-pandemic lows at 3.6% and average hourly earnings rose 0.3%, after gaining 0.4% in May.

After a brutal first half of the year, U.S. stock markets started July on a solid footing as investors took relief from easing commodity prices and the Fed hinting at a more tempered program of rate hikes amid concerns of a recession.

"We think the market has right-sized itself, somewhat, and will continue to adjust around the edges as we see macro data and as we work our way through earnings season," said Mike Loukas, chief executive of TrueMark Investments.

"Now it's a matter of people trying to figure out where the entry point is, and where the bottom is or if we are close to it."

Investors remain nervy though, sifting through each new piece of data and commentary from Fed governors to see how this might influence the U.S. central bank's plans to dramatically shift rates higher.

This resulted in see-saw trading on Friday, with all three main benchmarks experiencing periods in positive and negative territory.

"The market suspects when you start to see truly strong signs of the Fed relaxing its path of rate increases and leading indicators picking up, we'll probably get a pretty good upward movement in the market, and no one wants to miss that," said Derek Izuel, chief investment officer at Shelton Capital Management.

A Wall Street sign outside the New York Stock Exchange in New York City, New York, U.S., October 2, 2020. REUTERS/Carlo Allegri

"So we're going to have this volatility as we have all these false starts along the way."

With the earnings season around the corner, investors will focus on company forecasts as well as key inflation data expected next week to gauge the health of the economy.

Atlanta Fed President Raphael Bostic, until recently among the central bank's most dovish policymakers, said on Friday he "fully" supports another 75-basis-point rate rise later this month.

Speaking later on Friday, New York Federal Reserve President John Williams did not specify if he favors a half point or three-quarter point increase at the Fed's upcoming July meeting, but acknowledged rising interest rates were affecting the economy.

On Friday, the Dow Jones Industrial Average fell 46.4 points, or 0.15%, to 31,338.15, the S&P 500 lost 3.24 points, or 0.08%, to 3,899.38 and the Nasdaq Composite added 13.96 points, or 0.12%, to 11,635.31.

For the week, the Nasdaq gained 4.5%, while the S&P and Dow advanced 1.9% and 0.8%, respectively.

Volume on U.S. exchanges was 9.60 billion shares, compared with the 13.03 billion average for the full session over the last 20 trading days.

The S&P 500 posted two new 52-week highs and 29 new lows; the Nasdaq Composite recorded 21 new highs and 52 new lows.

(Reporting by Amruta Khandekar and Bansari Mayur Kamdar in Bengaluru and David French in New York; Editing by Marguerita Choy)

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