Stocks fell lower Friday to end the week in the red as Wall Street continues to expect another interest rate hike at the Federal Reserve's policy meeting later this month following June's jobs report. The Dow Jones Industrial Average dropped nearly 190 points, while the S&P 500 Index and Nasdaq Composite slipped 0.3% and 0.1%, respectively.
Here's how the market settled to close out the week:
S&P 500 Index
Dow Jones Industrial Average
Nasdaq Composite Index
All three market benchmarks also ended the week in negative territory, with the Dow falling 1.96% for its worst week since March. The S&P 500 and Nasdaq fell 1.16% and 0.92%, respectively as the recent tech rally took a break amid hawkish Fed minutes and strong labor market data.
On Friday, the Labor Department's June jobs report showed a cooling overall labor market, with non-farm payrolls rising by a less-than-expected 209,000, marking the smallest increase since December 2020. Meanwhile, the unemployment rate ticked lower to 3.6% as labor force participation increased to 83.5% -- the highest level since May 2002. However, stronger-than-expected wage growth signaled that the central bank may resume interest rate hikes this month, with average hourly earnings rising by 0.4% in June and 4.4% annually.
Analysts are currently betting on a 92% change the Fed will raise rates by 0.25% in July, according to the CME Group's FedWatch tool. That would bring the central bank's target rate range between 5.25% and 5.50%.
"A stronger-than-expected reading on average hourly earnings, as well as upward revisions to wage growth in earlier months, suggests the Federal Reserve is not out of the woods yet in its fight to tame elevated inflation," Wells Fargo senior economists Sarah House and Michael Pugliese wrote in a note on Friday, quoted by Yahoo!Finance.
In single-stock moves, Levi Strauss
"Our outlook on U.S. wholesale, even with the pricing moves that we're taking and everything else, we're being cautious about it," said CEO Chip Bergh, quoted by CNBC. "Just in light of the recent performance, and the current macro headwinds, and just the consumer dynamics in this market."
Looking ahead, market participants will focus on fresh inflation data following this week's strong labor market data as investors continue to look for clues on the central bank's next moves. On Wednesday, Wall Street will react to a reading of June's consumer price index, while Thursday will release last month's producer price index reading.