The S&P 500 Index closed up 0.83% on Thursday, while the Dow Jones increased by 0.77%, and the Nasdaq 100 rose by 0.99%. Stronger-than-expected June non-farm payroll numbers showed an addition of 147,000 jobs, exceeding predictions of 106,000, contributing to market gains. The unemployment rate fell by 0.1 percentage points to 4.1%, contrary to expectations for an increase. However, the 10-year Treasury note yield rose to 4.35%, and chances of a Fed rate cut later this month dropped significantly from 23% to just 5% following these labor market figures.
In legislative news, the House passed a reconciliatory bill expected to add $3.3 trillion to U.S. budget deficits over the next decade, which includes a $5 trillion debt ceiling hike to avert potential Treasury defaults. This measure is designed to maintain market stability until 2027. Concurrently, Treasury Secretary Scott Bessent expressed concerns regarding the Federal Reserve’s approach to interest rates, noting a discrepancy with current Treasury yields.
Internationally, trade negotiations are ongoing, with the EU aiming for a preliminary agreement with the U.S. by the July 9 deadline amidst announced tariffs. The trade deficit for May was recorded at $71.5 billion, surpassing expectations. Notably, labor statistics showed that initial unemployment claims fell to 233,000, better than the forecast, while continuing claims remained unchanged at 1.964 million, indicating some labor market resilience.
