Jobs spike makes it tough to cut interest rates

Global Markets Asian shares near two-month highs before U.S. payrolls test

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The Dow, resuming trading after the July 4 holiday, was down 177 points to 26,788 in mid-morning trading. The Nasdaq fell 52 points, or 0.6%, to 8,117.

Markets are well off of their lows of the day.

Among decliners were healthcare stocks .SPXHC , which fell 0.7% after a five-day run of gains.

The company expects to make an operating profit of $5.6 billion for the three months ended June, down from $12.7 billion in the same quarter a year ago.

The US labour market boomed in June, creating many more jobs than expected, according to the latest report from the Bureau of Labor Statistics.

Including revisions for the months of April and May, the average pace of job growth has been a vigorous 192,000 jobs per month over the past year.

Worker pay was up 3.1 per cent over the same month previous year, and has been at or above three per cent for 11 straight months, steadily outpacing inflation and delivering more purchasing power to workers. Investors sold bonds, sending the yield in the 10-year Treasury note up to 2.05% from 1.95% late Wednesday, a big move. In June, job growth took place among couriers and messengers, with 7,000 added, and air transportation, with 3,000 added.

In its latest forecast, the Federal Reserve Bank of Atlanta projected the US economy to have grown at a 1.3-percent annual rate in the second quarter this year, a deceleration from the 3.1-percent rate in the first quarter.

"It is still more likely than not that the Fed will cut rates but the odds have decreased somewhat", said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

The June report indicates that robust jobs growth is coupled with consistently strong wage growth.

Overall, employers have been adding jobs faster than new workers are flowing into the economy.

U.S. House of Representative Speaker Nancy Pelosi, a Democrat, welcomed the rebound in job growth, but said "hard-working Americans are still struggling under the Trump administration's disastrous special interest agenda".

ADP's figures don't always correspond with the government's job numbers. Because labor market slack still exists, employment can continue to rise and the economy can continue to grow as workers reenter the labor force.

Though the ADP report is not always a reliable indicator of what the BLS report will illustrate, it does provide a bit of insight into the health of employment in the U.S.

US employers announced that they will be cutting 140,577 jobs in the second quarter, according to Challenger. The May figure is in line with the 32,700 average over the a year ago. Those additional job cuts in the second quarter brings the first-half total this year to 330,987, which is a 35% increase from the same period last year.

Investors hope to glean more insight into the health of the USA economy today through jobs report that will get released at 8:30 AM.

The better-than-expected number eased some fears about an impending economic slowdown after disappointing growth in the private sector last month (employers added just 102,000 jobs, falling short of expectations of 140,000). "For workers, business leaders, and ultimately, consumers and investors, downside risks are growing".

European stocks traded broadly lower at the open.

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