Stocks fell as Apple Inc. dipped below the US$3 trillion mark and some other megacaps like Tesla Inc. and Meta Platforms Inc. slipped. Amazon.com Inc. jumped after its results. Treasuries rose, reversing some of this week’s losses after mixed jobs data.

The S&P 500 erased an advance that approached 1 per cent earlier in the day. Apple dropped almost 5 per cent after its outlook sparked worries over tepid demand. Amazon rose about 8 per cent on a bullish revenue forecast. Treasury 10-year yields fell from the highest level since November. The dollar retreated against all of its developed-market peers.

“We think it’s worth staying cautious while still respecting the market’s momentum,” said Callie Cox, investment analyst at eToro. “Bull markets are tough to fight, but look for quality risk and brace yourself for a summer storm in what’s usually a bumpy time of year.”

There was something for every bull and bear in the jobs report: the 187,000 growth in payrolls was softer than estimated, wages topped forecasts and unemployment fell. With 47 days to go before the next Federal Reserve decision — and so many other economic reports in between — the one thing that really hasn’t changed was the sense the Fed is close to wrapping up its hiking cycle.

Swap traders project a 40 per cent chance of another quarter-point rate increase by the end of this year — with the contracts pricing in about 10 basis points of tightening. By the end of 2024, they project rate cuts totaling more than 125 basis points.

More Comments:

• Seema Shah, chief global strategist of Principal Asset Management:
  • “Today’s jobs report will not clear up the Fed’s dilemma. This jobs report is definitely not a gamechanger. The Fed still has another report to come before their next meeting but, if no clear direction emerges, the Fed is likely to stay put.”
• Oscar Munoz, chief U.S. macro strategist at TD Securities:
  • “While today’s report does not cleanly argue for a skip decision for the September FOMC meeting, we are of the view that most of the details should be judged as positive news by most Fed officials. We continue to expect the FOMC to pause in September, with July’s rate hike likely the last of the Fed’s tightening cycle.”
• David Kelly, chief global market strategist at J.P. Morgan Asset Management:
  • “This morning’s report is unlikely to change the odds on any further Fed tightening – the July and August CPI reports will likely be much more important in determining whether the Fed feels the need to hike further.  However, it still looks likely that 2024 will be a year of rate cuts – moderate rate cuts if the economy is able to avoid recession and more rapid cuts if today’s moderate moderation dissolves into outright recession.” 
• Seth Cohan, vice president and executive director of The Wealth Alliance:
  • “For investors, this ‘something for everyone’ report likely means that the trends in markets of late will continue. Inflation is still higher than the Federal Reserve believes it should be, yet data has been showing mostly a slowing to declining rate in the last few months demonstrating that we could have a shallow recession or a soft landing.  Overall, the markets will likely be rangebound until we have a catalyst that helps to clarify economic conditions.”
• Charlie Ripley, senior investment strategist for Allianz Investment Management:
  • “Overall, the jobs report does not change the outlook for the Fed as we are near the end of the hiking cycle, but rather provides additional evidence that the economy is moving in the direction they need to slow inflation, albeit slow.”
• Bill Adams, chief economist at Comerica Bank:
  • “With the labor market very strong, wages rising solidly, and core inflation well above the Fed’s target, odds are better than 50-50 that the Fed makes another quarter percentage point rate hike in the second half of 2023, most likely at the Fed’s Nov. 1 decision.”
• Ian Lyngen, strategist at BMO Capital Markets:
  • “There is nothing within this release that will necessitate the Fed moves in September.”
• Krishna Guha, vice chairman of Evercore ISI:
  • “The Fed will get another employment report as well as two more inflation reports before the September meeting. We believe even if growth firms some further and labor market progress slows or stalls, provided that it does not reverse the Fed may still decide not to hike again, and rely instead on a faster than expected decline in inflation to raise real rates instead.”
• Gus Faucher, chief economist at PNC:
  • “Today’s July jobs report is consistent with a soft landing in the U.S. economy. Given recent inflation numbers and softer job growth, the FOMC will likely keep the fed funds rate unchanged when it next meets in mid-September, in a range of 5.25 per cent to 5.50 per cent. But further fed funds rate hikes are possible later this year given incoming data on inflation and the labor market.”

Corporate Highlights:

• Booking Holdings Inc. rose after reporting revenue that beat analysts’ estimates, reflecting strong demand for travel.
• DraftKings Inc. climbed as the online sportsbook posted sales that beat expectations and it raised its forecast for the year.
• Atlassian Corp. rallied after delivering a forecast for the new year that quelled investor anxieties over a slowdown in internet technology spending.
• Tupperware Brands Corp. gained after the food-storage container company reached an agreement with its lenders to restructure its existing debt obligations, as it continues its turnaround efforts.
• Nikola Corp. fell after saying it’s tapping a former General Motors Co. vice chairman to serve as its chief executive officer, replacing the current CEO after less than a year of running the electric truck maker.
• Icahn Enterprises LP dropped after Carl Icahn slashed his company’s quarterly payouts in half and pledged to “stick to our knitting” in another substantive move acknowledging complaints raised by short-seller Hindenburg Research earlier this year.
• Block Inc., Jack Dorsey’s payments company, slipped after reporting results that fell short of some analysts’ expectations.

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.5 per cent as of 4 p.m. New York time
• The Nasdaq 100 fell 0.5 per cent
• The Dow Jones Industrial Average fell 0.4 per cent
• The MSCI World index fell 0.1 per cent

Currencies

• The Bloomberg Dollar Spot Index fell 0.3 per cent
• The euro rose 0.5 per cent to US$1.1006
• The British pound rose 0.3 per cent to US$1.2743
• The Japanese yen rose 0.5 per cent to 141.82 per dollar

Cryptocurrencies

• Bitcoin fell 1 per cent to US$28,994.67
• Ether fell 0.8 per cent to US$1,828.58

Bonds

• The yield on 10-year Treasuries declined 13 basis points to 4.05 per cent
• Germany’s 10-year yield declined four basis points to 2.56 per cent
• Britain’s 10-year yield declined nine basis points to 4.38 per cent

Commodities

• West Texas Intermediate crude rose 1.3 per cent to US$82.62 a barrel
• Gold futures rose 0.4 per cent to US$1,976.60 an ounce