Mixed Performance in US Stocks as Job Market Shows Signs of Cooling

In a day of mixed performance on Wall Street, US stocks showed a divergence between winners and losers as a report indicated a cooling job market, signaling a potential slowdown in the economy. The S&P 500 experienced a modest increase of 0.2%, although more stocks within the index declined than rose. The Dow Jones Industrial Average rose by 0.4%, gaining 140 points, while the Nasdaq composite added 0.2%.

The bond market exhibited stronger activity, with Treasury yields sliding following the release of a report showing fewer job openings than expected at the end of April. This development has sparked hopes of a slowdown in the economy, which could help control inflation and potentially lead to interest rate cuts by the Federal Reserve, easing pressure on financial markets. Traders have subsequently increased their expectations for rate cuts later this year, according to data from CME Group.

However, concerns remain regarding whether the economic slowdown could lead to a painful recession. Such a scenario would result in layoffs across the country and weaken company profits, thereby dragging down stock prices. The report highlighted that the number of job openings in the US dropped to the lowest level since 2021, indicating a return to a more normal job market following the unusual circumstances caused by the COVID-19 pandemic.

Adding to worries about a slowing economy, the price of crude oil has declined this week, potentially signaling reduced growth in fuel demand. US crude oil prices have dropped nearly 5% and are now at a level similar to four months ago. Consequently, oil-and-gas stocks experienced significant losses for the second consecutive day, with Halliburton dropping 2.5%. Other companies tied to the economic cycle, such as steel makers and mining companies, also suffered sharp declines. Freeport-McMoRan, a copper and gold miner, lost 4.5%, while steelmaker Nucor fell 3.4%. Additionally, smaller companies in the Russell 2000 index, which typically thrive during strong economic periods, fell by 1.2%.

In other market news, Bath & Body Works experienced a significant decline of 12.8%, the worst loss in the S&P 500, despite surpassing revenue and profit expectations in the latest quarter. Analysts deemed the company’s forecast for the current quarter as underwhelming. GameStop also retraced some of its previous day’s gains, dropping 5.4% after a surge in stock price due to news of a major investor building a stake in the video-game retailer.

On the positive side, dividend-paying stocks performed well, benefiting from lower interest rates that drive income-seeking investors towards real estate investment trusts, utilities, and other stocks with relatively high dividends. Camden Property Trust, a multifamily housing provider, rose by 2.6%, while Mid-America Apartment Communities gained 2.1%. Additionally, certain Big Tech stocks, such as Nvidia, contributed to the market’s upward movement, with the company’s stock rising 1.2% amid continued enthusiasm on Wall Street surrounding artificial intelligence technology.

Overall, the S&P 500 rose by 7.94 points to reach 5,291.34. The Dow Jones Industrial Average gained 140.26 points, closing at 38,711.29, while the Nasdaq added 28.38 points to finish at 16,857.05. In the bond market, the 10-year Treasury yield slid to 4.33% from Monday’s 4.39% and Friday’s 4.50%, after recently surpassing 4.60%. The two-year yield, which closely reflects expectations for the Federal Reserve’s actions, fell from 4.81% to 4.77%.