PARIS, July 8 (Reuters) – The New York Stock Exchange opened lower on Friday after the publication of the monthly employment report which showed higher-than-expected job creation in June, which could encourage the United States Federal Reserve ( Fed) to raise interest rates sharply again this month.
In early trading, the Dow Jones index lost 57.31 points, or 0.18%, to 31,327.24 points and the broader Standard & Poor’s 500 fell 0.38% to 3,887.55 points.
The Nasdaq Composite lost 0.73%, or 85.09 points, to 11,536.25.
An hour before the opening of Wall Street, the US Department of Labor reported that the US economy added more jobs than expected in June, while the unemployment rate remained stable at 3.6 % and the average hourly wage showed a further increase of 0.3%.
These new data testify to the robustness of the labor market, while the pressure on wages remains strong, temporarily dispelling fears of a recession.
“It definitely reinforces the scenario of a 75 basis point (rate) hike over the next two weeks,” said Tom Plumb, portfolio manager at Plumb Balanced Fund, referring to the Fed’s monetary policy meeting. July 26-27.
Money markets now anticipate with a probability of 97.7% a rate hike of three quarter points against a probability of 91.5% before the publication of the employment report.
The publication of consumer price figures in the United States on Wednesday could also offer the Fed, in the event of another hike, an additional reason to tighten its tightening while the cost of credit has already increased by 150 basis points since march.
James Bullard, the president of the Fed of St. Louis, pleaded Thursday again for a peak of the federal funds rate (“fed funds”) at 3.5% by the end of the year.
In values, the big American banks, which will give the real kick-off to the results season next week, are sought after. JPMorgan Chase & Co, Goldman Sachs, Citigroup, Morgan Stanley, Bank of America Corp and Wells Fargo gained 0.3% to 1.1%.
Levi Strauss & co’s, for its part, took 3.8% thanks to quarterly results that exceeded expectations.
On the downside, Twitter fell 3.6%, the Washington Post having reported that the plan to buy the social network by Elon Musk was “seriously threatened”, while the video game distributor Gamestop, down more than 5%, suffered from the dismissal of its financial director Michael Recupero.
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