A ‘Join Our Team’ sign is displayed outside a Chipotle location on June 2, 2023 in Los Angeles, California.
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What you need to know today
U.S. private sector companies added 497,000 jobs in June, according to payroll processing firm ADP. That's more than two times the Dow Jones estimate of 267,000, and well above May's downwardly revised figure of 267,000 jobs. The ADP jobs report doesn't necessarily give a good estimate of the Department of Labor's jobs report. But it shows how strong the U.S. jobs market remains.
Worst days and plunging profits
U.S. stocks fell Thursday as traders grew concerned over what the scorching hot ADP jobs report means for interest rates. The yield on 2-year Treasury rose around 4 basis points to hit 4.987%, while the 10-year jumped 9 basis points to 4.031%. Asia-Pacific markets traded lower for a second session on Friday. South Korea's Kospi lost around 1.3%, weighed down a 2% drop in Samsung Electronics after the firm estimated that its second-quarter profits plunged 96%.
An anticipated return
Hong Kong-listed Alibaba shares jumped 5.6% after Reuters reported that Chinese authorities are likely to end Ant Group's regulatory revamp with a fine of at least 8 billion yuan ($1.1 billion). This would clear the way for Ant, an affiliate of Chinese tech giant Alibaba, to get a financial holding company license and eventually list on the stock market, as it had intended before China cracked down on the company in 2020.
China's relationships in focus
U.S. Treasury Secretary Janet Yellen started her four-day trip in Beijing Thursday. Yellen will discuss with China "how to responsibly manage [the U.S.-China] relationship," the Treasury Department said Sunday. Separately, research by the Economist Intelligence Unit identified Japan, South Korea and the Philippines as the economies that are the "most vulnerable" in the event of a conflict between Taiwan and China.
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With its high youth unemployment rate and shrinking factory activity, China's economy may not be faring too well currently. But there are six U.S.-listed Chinese stocks that Morgan Stanley says have the potential to rise dramatically — one's a chipmaker that can soar 80%.
Money Report
The bottom line
The expectation-shattering ADP jobs report was all traders could think about yesterday.
Threads, Meta's new Twitter rival, snagging 30 million signups in one day? Investors loved that. They pushed shares up about 2% in premarket trading.
BlackRock CEO Larry Fink calling bitcoin "an international asset"? Cryptocurrency watchers almost swooned. Prices of bitcoin touched a 13-month high.
Then the jobs data was released and sucked all the air out of the room. It reaffirmed that the U.S. economy isn't cowed by current interest rates, meaning that higher rates in the upcoming months are all but certain.
Traders now think there's a 26.4% chance the Federal Reserve will raise benchmark rates to 5.5% to 5.75% in September, according to CME FedWatch Tool. On Wednesday, the odds for that were only 18.1%, noted CNBC's Scott Schnipper.
Meta ended the day down 0.81%. Bitcoin fell 4% from that height.
Major U.S. indexes fared equally badly. The S&P 500 declined 0.79%, the Dow Jones Industrial Average sank 1.07% and the Nasdaq Composite slid 0.82%. Those were the worst daily movements for the S&P and Dow since May. All indexes are on track to post weekly losses, too.
Another piece of jobs data released yesterday, however, may soothe some worries. The Job Openings and Labor Turnover Survey showed that job listings in May fell to 9.82 million, 496,000 fewer than April. It was also below the estimate of 9.9 million consensus estimate.
Put together with the ADP jobs report, we see a (very blurry) picture of lower demand for workers from companies, and more people in jobs — in other words, the U.S. labor market inching towards equilibrium.
The Labor Department's nonfarm payrolls report for June, out tomorrow, will give us a clearer view. Economists expect a 240,000 rise in payrolls and an unemployment rate of 3.6%. But we all know how expectations tend to turn out when it comes to the U.S. jobs market.
