Stock markets near records after strong June jobs report

The S&P 500 was virtually unchanged in its first trading after the July 4 holiday, following two straight days of setting all-time highs. The Dow Jones Industrial Average was down 94 points, or 0.2%, as of 10:15 a.m. ET, and the Nasdaq Composite added 0.4% to its own record.

The bond market was a bit more decisive, with Treasury yields falling after a mixed U.S. jobs report. Employers hired more workers last month than economists expected, but the number of hires was still down from May. In addition, the unemployment rate unexpectedly rose and the U.S. government said hiring in previous months was lower than it had previously reported.

Overall, the data reinforced Wall Street’s belief that U.S. economic growth is slowing under the weight of high interest rates. That’s exactly what investors want to see, because a slowdown would help contain inflation and could prompt the Federal Reserve to start cutting its key interest rate.

The question is whether the Federal Reserve can time its next steps precisely, cutting rates early enough and by enough to prevent the slowdown from sliding into a recession, but not so much that it allows inflation to pick up steam and start up again.

The jobs report is expected to prompt the Fed to cut its key interest rate later this year, likely in September. The yield on two-year Treasury notes, which closely tracks expectations for Fed action, fell to 4.63% from 4.71% late Wednesday.

The yield on the 10-year Treasury, the centerpiece of the bond market, fell to 4.31% from 4.36%.

Friday’s jobs report follows a string of data showing a broad slowdown in the U.S. economy. Reports earlier this week showed that economic activity in the U.S. service and manufacturing sectors contracted last month, coming in weaker numbers than economists had expected. And U.S. consumers at the lower end of the income scale showed how hard it is to keep up with continued price increases as credit card balances balloon.

“What matters for long-term investors is whether recession fears materialize,” said Brian Jacobsen, chief economist at Annex Wealth Management. “We think it’s unlikely we’ll see a recession this year or next, but that doesn’t mean markets won’t fear one.”

On Wall Street, gold miner Newmont rose 1.4%, one of the biggest gains in the S&P 500. It benefited from a 0.7% rise in the price of gold, which typically benefits from falling interest rates. That's because high-yield bonds can draw investors away from gold, which doesn't yield any returns to its holders.

Modest gains in some influential big names also helped support the market, even as the majority of S&P 500 stocks fell. Apple rose 1.5% and Microsoft gained 1.2%.

Amazon rose 1% after announcing a deal in which the parent company of Saks Fifth Avenue will buy Neiman Marcus Group for $2.65 billion. Amazon will hold a minority stake in the deal.

Companies closely tied to the cryptocurrency business were the biggest losers on Wall Street, with bitcoin falling below $56,000 from nearly $63,000 earlier in the week. The cryptocurrency's value has returned to where it was in February.

Coinbase Global fell 4.6% and Robinhood Markets fell 2.9%.

In overseas stock markets, London's FTSE 100 fell 0.5% after British voters ushered in a new regime by ousting the Conservatives in this week's national election.

The United Kingdom has endured a turbulent run of years under Conservative rule, leaving many voters pessimistic about the future of their country. Britain’s exit from the European Union, followed by the COVID-19 pandemic and Russia’s invasion of Ukraine, have battered the economy. Rising poverty and cuts to public services have led to complaints of a “broken Britain.”

Germany's DAX index rose 0.2% after the government agreed a 2025 budget and recovery plan for Europe's largest economy, ending a months-long row that threatened to topple Chancellor Olaf Scholz's center-left coalition.

The disagreements have fueled speculation that the already unpopular government could collapse and trigger early parliamentary elections in which Germany could follow the lead of other European countries in moving to the political right.

In Asia, Japan's Nikkei 225 index rose above 41,000 points on Friday morning, surpassing its record closing level set on Thursday, but ended the day slightly lower.

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