On Thursday, U.S. stocks displayed varied results. The Dow Jones Industrial Average surged to a new record, while computer chip manufacturers faced declines that led to mixed index outcomes. The S&P 500 ended largely unchanged, showing an increase of less than 0.1%, despite nearly 70% of its stocks rising. In contrast, the Dow rose by 594 points, or 1.1%, and the Nasdaq composite fell 0.8% after initially rising.
Job Market Data Impact
A report revealed that U.S. employers added 57,000 jobs in the last month. Although this is positive for the economy, it fell short of economists’ expectations of 100,000 jobs, marking a slowdown from May’s job growth. The softer hiring numbers may ease inflation pressures. The war with Iran had driven oil prices up, causing inflation to accelerate worldwide. With oil prices now dipping below pre-war levels, reduced inflation may prompt the Federal Reserve to reconsider frequent interest rate hikes this year. Lower interest rates generally spur economic activity by making borrowing cheaper for households and businesses. They also tend to boost stock and investment prices.
Interest Rates and Treasury Yields
The 10-year Treasury yield reached 4.50% in the morning, up from 3.97% before the conflict. However, after the employment data release, it declined to 4.46%, settling at 4.48%. Traders now predict an 82% chance of the Fed, under new Chairman Kevin Warsh, not raising rates at their upcoming meeting. This prediction increased from 71% the previous day, based on CME Group data. Brian Jacobsen of Annex Wealth Management noted that the labor market’s moderate pace might allow the Fed to wait and observe inflation trends before deciding on rate increases.
Movements in Specific Stocks
National Beverage shares climbed 7.5% after announcing a special $3.25 dividend per share. Dollar Tree saw a 2.4% rise as it approved a $2.5 billion stock buyback program. The crypto sector also performed well, with bitcoin prices rising 2% after nearing a low not seen since 2024. Robinhood Markets and Coinbase Global saw increases of 3.8% and 3.9%, respectively.
Pressure on Chip Companies
Chip manufacturers faced downturns amid concerns over inflated stock values driven by AI hype. This sector’s spending on chips and data centers may not yield the projected profits. Memory maker Micron Technology saw a 5.5% drop, following a 10.6% loss previously. Nvidia and Lam Research also fell by 1.4% and 10.2%, weighing heavily on the S&P 500 due to their large market sizes. Nvidia’s valuation of nearly $4.7 trillion gives its stock movements significant influence on the index.
Ultimately, the S&P 500 inched up by 0.01 to 7,483.24 points, the Dow gained 594.83 to reach 52,900.07, while the Nasdaq decreased by 207.36, closing at 25,382.67.
Global Market Responses
Internationally, chip company declines led to significant drops in various Asian markets. South Korea’s Kospi index dropped 7.9%, marking its most significant fall since a 10% decrease weeks prior. Indices in Tokyo and Shanghai also declined by 2.5% and 2%, respectively. European markets fared better, with France’s CAC 40 rising by 1.7%.
Oil Market Dynamics
Oil prices saw a morning drop, recovering some losses as the day advanced. Brent crude settled at $71.80 per barrel, reflecting a 0.3% increase.
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