Dow tumbles on red-hot US job market


JULY 6, 2023

The number of available jobs in the United States dropped in May after an uptick the month before, the Bureau of Labor Statistics reported Thursday.

Job openings fell to 9.82 million at the end of May, dropping from an upwardly revised 10.3 million in April, according to the BLS’ latest Job Openings and Labor Turnover Survey report.

Economists had projected that openings fell to 9.935 million for May, according to Refinitiv.

The Federal Reserve has been hoping for more slack in the labor market, since an imbalance between worker demand and supply could cause wages to rise and, ultimately, add upward pressure to inflation. The central bank has tried to tame inflation with 10 consecutive rate hikes, followed by a pause at its June meeting.

The May JOLTS data showed that the number of new hires rose to 6.21 million from 6.1 million, quits jumped up to 4.02 million from 3.77 million and layoffs dipped to 1.56 million from 1.59 million.

As of May, there were 1.6 open jobs for every person looking for one, BLS data shows.

This story is developing and will be updated.

Stocks tumbled on Thursday after fresh data signaled that the labor market remains piping hot, heightening concerns that the Federal Reserve will raise interest rates for longer than expected.

The Dow Jones Industrial Average index dropped 453 points, or 1.3%. The S&P 500 fell 1.1% and the Nasdaq Composite slid 1.3%.

The 2-year Treasury yield reached as high as 5.113% early Thursday morning, touching its highest level since June 2007. The 2-year was last trading at 5.065%, its highest level since March 2023.

The pan-European Stoxx 600 index fell about 2.4% as investors parsed the strong US labor data.

US private sector businesses added an estimated 497,000 jobs, according to payroll processor ADP’s latest National Employment Report released Thursday. That’s significantly higher than the 220,000 jobs economists predicted, according to Refinitiv.

Separately, weekly jobless claims data from the Department of Labor rose more than expected at the end of June, but remain well below pre-pandemic levels.

The labor data further worried investors already on edge about the Fed’s hawkish stance against inflation after the June meeting minutes released Wednesday reiterated both that more hikes are likely coming and that the central bank predicts a possible mild recession later this year.

While a strong jobs market despite the Fed’s aggressive rate-hike campaign appears to be a positive economic sign, it is being seen negatively by the markets because the Fed may continue to raise interest rates. It also suggests that pressures keeping inflation high, such as consumer spending, are persisting.

“We need to start seeing some bad news,” said Matt Dmytryszyn, chief investment officer at Telemus.

Oil prices fell as Wall Street grew fearful about the health of the economy. West Texas Intermediate, the US benchmark, fell to roughly $71 a barrel.

Investors are looking to the government’s June jobs report due Friday for more insight into the state of the labor market. Economists project an addition of 225,000 jobs in June and that the unemployment rate will fall to 3.6%, according to Refinitiv.

The VIX, known as Wall Street’s fear gauge, surged about 17.2% to roughly 17.

Both big and regional bank stocks fell. JPMorgan Chase fell 1.8%, Wells Fargo slid 2.2% and Citigroup declined 3.2%.

PacWest Bank slipped 8.6%, New York Community Bank fell 1.7% and KeyCorp slipped about 3%.

Courtesy/Source: CNN