Stocks fall sharply following strong May jobs report

Rivai H Tukimen

U.S. stocks slid Friday after May employment data showed a slower but still robust pace of hiring during the month.

The S&P 500 plunged 1.7%, while the Dow Jones Industrial Average shed 340 points, or 1%. The Nasdaq Composite tumbled 2.6%. Meanwhile, the most notable move in markets following the jobs report came from the bond market, with the yield on 10-year Treasury climbing 7 basis points to 2.99% following the release.

The Labor Department’s monthly employment report showed the U.S. economy created 390,000 jobs in May, with the unemployment rate holding steady at 3.6%. Economists had expected a clip of 318,000 jobs with the unemployment rate falling to 3.5%.

“Overall, it seems like the job creation machine runs on full-steam and anecdotal evidence has it that hiring remains difficult for businesses of all sizes as demand outpaces supply,” Christian Scherrmann, DWS’ U.S. Economist said in a note.

“Looking ahead, the Fed is most likely to feel reassured that it has struck the right balance lately,” he added. “That, in turn, means it is likely to stick to its aggressive monetary normalization path.”

In markets, shares of Tesla (TSLA) plunged nearly 9% after Reuters reported CEO Elon Musk warned of a “super bad feeling” about the economy and said the company is expected to trim about 10% of jobs in an email to executives.

Musk also motioned management to “pause all hiring worldwide” in the note. ​​The electric-vehicle giant joins a growing docket of companies that have recently reported grappling with headwinds from macroeconomic uncertainty.

Musk’s warning comes just days after JPMorgan Chase (JPM) boss Jamie Dimon cautioned of a “hurricane” bearing down on the U.S. economy.

Lululemon (LULU) shares edged higher after the athletic apparel manufacturer revealed strong first-quarter earnings results and raised its outlook for 2022, also predicting continued strength in its business despite economic constraints that have hit some of its retail peers.

9:35 a.m. ET: Stocks slide as investors mull better-than-expected May employment data

Here were the main moves in markets at the opening bell Friday:

  • S&P 500 (^GSPC): -48.76 (-1.17%) to 4,128.06

  • Dow (^DJI): -289.00 (-0.87%) to 32,959.28

  • Nasdaq (^IXIC): -218.39 (-1.77%) to 12,098.51

  • Crude (CL=F): +$0.34 (+0.29%) to $117.21 a barrel

  • Gold (GC=F): -$8.60 (-0.46%) to $1,862.80 per ounce

  • 10-year Treasury (^TNX): +7.2 bps to yield 2.9850%

8:51 a.m. ET: A few early highlights from a first pass at the jobs report

The headline numbers on the May jobs report were right down the middle.

But underneath the surface we’ve got a few indications of where the winds are blowing in a dynamic U.S. labor market.

The number of workers employed in retail fell by 60,700 last month, a sign we’re likely to see folks interpret as indicative of a softening consumer backdrop. The 47,000-worker increase in transportation and warehousing, however, suggests the Amazon side of the retail economy remains intact for now.

Industry-level data also shows leisure & hospitality logged the biggest gains last month, which comes as little surprise given the indications we’ve seen from travel-related plays about their demand backdrop leading into the summer months.

In terms of labor market composition, a 211,000-worker decline in the labor force is notable, as retirements were seen as a headwind last year to the labor market making a full and timely recovery from the pandemic-induced shock.

The duration of unemployment data also gives us an interesting look at the “barbell” structure of the labor market right now — more than 100,000 fewer workers were classified as either unemployed for less than 5 weeks or unemployed for more than 27 weeks. So we see the short-term and long-term unemployed decline as a portion of the overall unemployed population, and from this we could see an argument being made that this remains an “anyone who wants a job can get a job” kind of labor market recovery.

—Myles Udland, senior markets editor

8:32 a.m. ET: May jobs report comes in better than expected

Job growth last month was better than expected in the U.S. economy.

Here are the latest numbers from the BLS’ May jobs report:

  • Non-farm payrolls: +390,000 vs. +318,000 expected

  • Unemployment rate: 3.6% vs. 3.5% expected

  • Average hourly earnings, month-over-month: +0.3% vs. +0.4% expected

  • Average hourly earnings, year-over-year: +5.2% vs. +5.2% expected

7:12 a.m. ET: Stock futures stumble ahead of Labor Department’s monthly jobs report

Here’s where the major indexes were in early-hours trading Friday:

  • S&P 500 futures (ES=F): -22.25 (-0.53%) to 4,153.00

  • Dow futures (YM=F): -114.00 (-0.34%) to 33,109.00

  • Nasdaq futures (NQ=F): -118.75 (-0.92%) to 12,775.00

  • Crude (CL=F): -$0.78 (-0.67%) to $116.09

  • Gold (GC=F): -$2.00 (-0.11%) to $1,869.40 per ounce

  • 10-year Treasury (^TNX): -1.8 bps to yield 2.9130%

A person enters the Wall Street subway station near the New York Stock Exchange (NYSE) in New York on May 27, 2022. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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https://finance.yahoo.com/news/stock-market-news-live-updates-june-3-2022-111552199.html

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