The S&P 500 and Nasdaq surged to fresh record highs on Thursday, buoyed by a stronger-than-expected jobs report. At the opening bell, the Dow Jones Industrial Average rose 81.3 points, or 0.18%, to 44,565.75. The S&P 500 gained 19 points, or 0.31%, to 6,246.46, while the Nasdaq Composite jumped 104.5 points, or 0.51%, to 20,497.66.
The U.S. economy added 147,000 jobs in June, exceeding expectations and pointing to continued strength in the labour market. The figure, reported by the Bureau of Labor Statistics on Thursday, came in well above the projected 110,000 and slightly higher than May’s upwardly revised total of 144,000. April’s numbers also received a modest boost, now standing at 158,000 following an 11,000-job revision.
The unemployment rate fell to 4.1% in June, marking its lowest level since February and defying forecasts that had predicted a rise to 4.3%. A broader measure of unemployment, which includes discouraged workers and those employed part-time for economic reasons, dipped to 7.7%, its lowest since January.
However, the decline in joblessness was largely due to a shrinking labour force. The labour force participation rate dropped to 62.3%, its lowest point since late 2022, as the number of people not counted in the labour force rose by 329,000. The household survey, which helps calculate the unemployment rate, showed a smaller employment gain of just 93,000. Meanwhile, the number of people who haven’t searched for a job in the past four weeks increased by 234,000 to 1.8 million.
Meanwhile, the stronger-than- expected jobs report has sharply reduced the chances of a Federal Reserve rate cut in July, with odds dropping from 24% to below 5%. Market expectations have now shifted to September for possible easing. Fed Chair Jerome Powell has already struck a cautious tone, warning that new tariffs could drive up inflation while dampening economic growth. Although President Trump has continued to push for immediate rate cuts, the solid labor numbers bolster the Fed’s decision to hold steady for now. Despite concerns over Trump’s trade policies creating business uncertainty, hiring has remained stable. However, ADP’s earlier report showing private-sector job losses revealed some underlying weakness.
