Investors speculate on Fed's actions amid mixed market movements

On Friday, the stock market showed mixed movements as investors digested the latest payrolls data and speculated on the Federal Reserve's future actions. The Dow and the S&P 500 exhibited uncertainty, while the Nasdaq experienced gains primarily fueled by megacap tech stocks.

The U.S. Labor Department's report revealed a slight uptick in the unemployment rate to 4.1% in June, surprising analysts who expected it to remain steady at 4%. However, the addition of 206,000 jobs in June surpassed expectations, although May's figures were revised downward. Average hourly earnings also saw a modest increase of 0.3%.

Market reaction to the data was subdued, with some relief that job gains were better than anticipated. This data, while not concerning, could impact the Fed's future decisions. Treasury yields fell after the report, benefiting megacap stocks like Apple, Amazon.com, and Meta Platforms, which saw positive movements. Alphabet's shares reached a new high, while the energy sector experienced declines.

Following the payrolls data release, the probability of a 25-basis point interest rate cut in September stood at approximately 75%. Traders maintained expectations of two rate cuts this year. Economic indicators hinting at a U.S. economic slowdown reinforced expectations of multiple rate cuts, despite the S&P 500 and Nasdaq hitting record highs earlier in the week.

With the market closed for U.S. Independence Day on Thursday, trading volumes remained light throughout the week. Major indexes like the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite displayed mixed movements on Friday morning but were poised for weekly gains. As second-quarter earnings season approaches, focus shifts to whether the market rally will extend beyond megacap stocks and if earnings can support current valuations.

Macy's stock surged by 10% on news of increased bids for the department store chain. Declining issues outnumbered advancers on the NYSE and Nasdaq, with new highs and lows recorded on the S&P and Nasdaq indices.

The stock market's response to the latest payrolls data was a mix of caution and optimism. While job gains exceeded expectations, concerns about economic slowdown and potential rate cuts linger. Investors are closely monitoring upcoming earnings reports to gauge the market's future trajectory.