Stock market today: Stock rally takes a breather ahead of key jobs report
How did the S&P 500 and Dow Jones Industrial Average perform on the day covered in the article?
On the day covered in the article, the S&P 500 dipped barely below the flatline, while the Dow Jones Industrial Average popped slightly, adding 0.2%.
What specific expectations do economists have for the May jobs report in terms of nonfarm payrolls and the unemployment rate?
Economists expect the May jobs report to show a rise in nonfarm payrolls by 180,000, while the unemployment rate is forecast to remain steady at 3.9%. This would be a continuation of a trend seen throughout labor market data this week, with job openings falling to their lowest level since February 2021, and the ratio between the number of job openings and unemployed people reaching 1.2 in May, in line with pre-pandemic levels.
What recent trends in the labor market data have contributed to the growing anticipation of a Federal Reserve policy shift?
Several recent trends in the labor market data have contributed to the growing anticipation of a Federal Reserve policy shift. These include:
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Job Openings Decline: The latest Job Openings and Labor Turnover Survey (JOLTS) showed job openings fell in April to their lowest level since February 2021. This indicates a possible cooldown in the labor market, which could prompt the Federal Reserve to reconsider its policy stance.
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Unemployment Rate: While the unemployment rate has remained relatively low, other indicators, such as the labor force participation rate and the employment-to-population ratio, suggest there may be more slack in the labor market than the headline unemployment rate indicates.
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Wage Growth: While wage growth has been strong in recent months, there are signs that it may be starting to moderate. The median year-over-year pay increase for job switchers fell to 7.8% in May, down from 8.3% in March and 8% in April. This could be an early sign of a slowdown in wage growth, which could lead to a shift in Federal Reserve policy.
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Labor Market Disparities: There are significant disparities in the labor market, with some groups experiencing higher unemployment rates and lower labor force participation rates than others. These disparities could impact the Federal Reserve's policy decisions, particularly if they worsen or persist.
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Job Market Resilience: Despite high-profile layoffs in the tech sector and other industries, the job market has remained resilient, with the economy adding jobs at a solid pace in recent months. However, there are concerns that this could change if the economy slows further or if businesses become more cautious about hiring.
These trends, along with other economic indicators, will likely factor into the Federal Reserve's policy decisions in the coming months.