NEW YORK (AP) — Wall Street is mixed Friday after data suggested the U.S. job market is still warm enough to keep the economy growing but maybe not so hot that it stokes inflation.
The S&P 500 was 0.1% lower in early trading. The Dow Jones Industrial Average was down 86 points, or 0.3%, at 33,836, as of 9:45 a.m. Eastern time, and the Nasdaq composite was 0.2% higher.
A lot is riding on whether the economy can navigate the narrow pathway to avoid a long-predicted recession. It needs to keep growing despite much higher interest rates instituted by the Federal Reserve to bring down inflation. But it can’t grow so quickly that the Fed feels pressure to tighten the screws much further on the economy to prevent inflation from spiraling again.
Friday’s report showed U.S. employers added 209,000 jobs last month, a slowdown from May’s hiring of 306,000. Perhaps more importantly, it wasn’t far off economists’ expectations. That’s unlike a report from Thursday, which sent stocks dropping after it suggested U.S. hiring could be much stronger than expected.
Besides the slowdown in overall hiring, some numbers underneath the report’s surface also showed some loosening in the job market. More people are working part-time because their hours have been cut, for example, said Brian Jacobsen, chief economist at Annex Wealth Management.
“The job market is healthy, for now, but it’s not red hot,” he said.
That could keep the Federal Reserve on the course it’s been hinting at recently: perhaps two more increases this year before the Fed holds rates at a high level to ensure inflation returns to its 2% target.
Treasury yields were mixed following the much anticipated jobs data. The 10-year Treasury yield rose to 4.04% from 4.03% late Thursday. It helps set rates for mortgages and other important loans.
The two-year yield, which moves more on expectations for the Fed, slipped to 4.94% from 5.00%. It dropped as low as 4.91% immediately after the jobs report’s release before paring its loss.
Some concerning signals for inflation were also still embedded in the report. Wage growth held steady last month, instead of slowing as economists expected, for example. While workers would prefer the 4.4% gain in average hourly earnings from a year earlier instead of the 4.2% that was predicted, Wall Street’s fear is that the Fed will see too-strong wage growth as keeping upward pressure on inflation.
Yields are already around their highest levels since March, which was when high rates helped trigger three failures in the U.S. banking system that rattled confidence across financial markets. High rates have also caused pain across other corners of the economy, from manufacturing to housing.
Bank stocks were rising Friday amid relief that the jobs report wasn’t much stronger than expected, like Thursday’s more limited payroll report was. JPMorgan Chase and Bank of America each rose 1% and were two of the strongest forces pushing upward on the S&P 500.
Smaller banks that have been under heavy scrutiny as Wall Street hunts for other potential weak links were also climbing. PacWest Bancorp gained 1.8%.
On the losing side of Wall Street was Levi Strauss, which tumbled 6.7% despite reporting slightly stronger profit for the latest quarter than analysts expected. It cut its forecasted range for earnings for the full year, as its U.S. wholesale business remains under pressure.
In stock markets abroad, indexes continued to sink in China, where a recovery in the world’s second-largest economy is progressing slower than hoped following the removal of anti-COVID restrictions. Hong Kong’s Hang Seng fell 0.9%, and stocks in Shanghai slipped 0.3%.
U.S. Treasury Secretary Janet Yellen was also in Beijing attempting to ease tensions between the world’s two largest economies.
Yellen is meeting with senior Chinese officials to try to soothe antagonism and promote global financial stability. Speaking with business people, she criticized China’s treatment of U.S. companies and new export controls on metals used in semiconductors, while defending U.S. controls on technology exports that irk Beijing, saying they’re needed for national security.
In Europe, stocks were mixed. Germany’s DAX returned 0.5%, and the FTSE 100 in London fell 0.4%.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
