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Afternoon Note

The Verdict

By Charles Payne, CEO & Principal Analyst
6/7/2024 1:41 PM

Looks like the market decided good news is good news, as both the S&P 500 and the Nasdaq Composite are up slightly after the higher-than-expected non-farm payrolls and hourly earnings reported. This comes as unemployment came in slightly worse than expected at 4%. 

The reading may lower the prospect of future rate interest rate cuts (more below) as the economy data shows the labor market is still relatively stable, benefiting some sectors while hurting others. Hence, the reaction among sectors is mixed. Financials (XLF), Industrials (XLI), and Health Care (XLV) are leading today, and Materials (XLB), Real Estate (XLRE), and Utilities (XLU) are underperforming. 

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Bonds Reaction

The 10-year Treasury Yield (TNX) went up 14.3 basis points, to a yield of 4.42%, today after the jobs report. The probability of rate cuts priced into the bond market went down.

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The market went from expecting two rate cuts this year to expecting one, ending all hopes for a rate cut anytime soon. Economists predict next week’s FOMC meeting quarterly projections will reflect fewer cuts this year than the three penciled by policymakers in March.

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