US stocks opened lower as nonfarm payrolls rose by 172,000 jobs in May, surpassing the 85,000 forecast by economists. This unexpected growth has increased the likelihood of a Federal Reserve interest rate hike, now seen as a 98% certainty by money markets.
Tech stocks led the decline, with Nvidia dropping 2.5% and the Philadelphia SE Semiconductor index falling over 5%. Six of the 11 major S&P 500 indexes moved higher, with consumer staples leading the gains. At 09:43 a.m. ET, the Dow Jones Industrial Average fell 128.36 points to 51,433.57, the S&P 500 lost 64.63 points to 7,519.68, and the Nasdaq Composite lost 374.02 points to 26,456.94.
Citi announced it was reducing equity exposure due to rising inflation and positioning risks, although it maintained a positive long-term view on U.S. equities driven by AI earnings growth. Lululemon Athletica slumped 8% after cutting its annual profit forecast, while Cooper Companies rose 6.4% after exceeding second-quarter estimates.
“You're not talking about a labor market that's doing fabulous, but you're also not looking at a labor market that's completely crumbling.”
Mark Malek, Chief Investment Officer at Siebert Financial
S&P Global confirmed it would not change eligibility requirements for its indices, ruling out a quick entry for SpaceX into the S&P 500. Marvell Technology, valued at over $270 billion, is a contender for inclusion in the index following rebalancing results.
Background
The labor market's resilience amid geopolitical tensions and inflation concerns underscores the complexity of the current economic landscape. The Fed's upcoming meeting will be closely watched for indications of monetary policy direction.
Investors should monitor developments in Fed policy and geopolitical tensions, as these factors will likely influence market movements in the coming weeks.
