Morning Report: US stocks fall after better-than-expected jobs data

US stocks slid overnight after better-than-expected jobs data increased investors’ anxiety around the state of the economy and the path of interest rates. The data from the ADP showed that private sector jobs increased by 497,000 in June, in the biggest monthly gain since July 2022. June’s increase was more than double the Dow Jones consensus estimate of 220,000 and far better than the downwardly revised 267,000-job addition seen in May. As a result of the increases, global stocks and bonds faced a sell-off as US borrowing costs hit a 16-year high. The news intensifies expectations of further rate rises by the Federal Reserve.

The Dow Jones Industrial Average dropped 366.38 points, or 1.07 per cent, to close at 33,922.26. The S&P 500 lost 0.79 per cent to end at 4,411.59. The Nasdaq Composite dropped 0.82 per cent to 13,679.04. Thursday’s session marked the worst daily performance for the Dow and S&P 500 since May. The three major indexes are on pace to finish the week lower with just Friday’s session left in the holiday-shortened trading week.

The Dow is poised for a slide of 1.4 per cent on the week. The S&P 500 and Nasdaq, meanwhile, are on pace for weekly losses of 0.9 per cent and 0.8 per cent, respectively.

In company news, JetBlue Airways tumbled more than 7 per cent a day after the company announced it would end its partnership in the northeast U.S. with American Airlines to focus on Spirit Airlines. American shares moved 2 per cent lower, while Spirit rose more than 1 per cent.

Genius Sports' stock surged by over 25 per cent as they reached a multi-year extension agreement with the National Football League, solidifying their exclusive distribution rights for real-time statistics.

On the other hand, Affirm experienced an 11 per cent drop in shares after being downgraded by Piper Sandler due to concerns over the resumption of student loan payments and higher interest rates.

And Dr Pepper's stock rose by 1.4 per cent following an upgrade by Morgan Stanley, who highlighted the undervalued stock and promising refreshment beverage trends.

In EV-related news, China is making early moves to tap new centres of lithium supply across Africa, with Chinese companies investing heavily in African lithium mines to secure a significant increase in the production of lithium raw materials, which is crucial for their position as the top EV battery producer. The mines across the continent are expected to ramp up production of lithium raw materials more than 30-fold by 2027, according to S&P Global Commodity Insights.

Overall, all US sectors closed lower overnight. Energy was the worst performer, whilst Tech recorded the fewest gains.

Futures

The SPI futures are pointing to a 1.26 per cent fall.

Currency

One Australian dollar at 7:30 AM was buying 66.25 US cents.

Commodities

Gold has lost 0.61 cent. Silver has lost 2.19 per cent. Copper has lost 0.90 per cent. Oil has gained 0.01 per cent.

Figures around the globe

European markets closed lower yesterday. London’s FTSE lost 2.17 per cent, Frankfurt lost 2.57 per cent, and Paris closed 3.13 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei lost 1.7 per cent, Hong Kong’s Hang Seng lost 3.02 per cent and China’s Shanghai Composite closed 0.54 per cent lower.

The Australian sharemarket closed 1.24 per cent lower at 7163.45.

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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