Equity markets finished lower today amid strong hiring data reported by ADP.
The technology and communication services sector lagged today while energy is leading.
Wild Meme stock trading continues as BlackBerry and Bed Bath and Beyond shares rose sharply, in part due to retail investors.
Retail investors made headlines earlier this year when they attempted a short squeeze in GameStop.
International stocks traded mostly to the downside, U.S. bond yields were higher as well as oil, and gold was lower today.
The price of crude oil was flat at $68.85 and the spot price of gold was down $37 or -1.93 percent to $1,873.10.
The ADP jobs data released today showed private sector jobs added in May totaled nearly 1 million.
The figure came in well above the 680,000 estimate which is welcome news as the labor market recovery continues after seeing high unemployment during the pandemic.
The service sector led the gain in jobs, adding nearly 850,000 jobs in May. Although the ADP survey tends to be a poor indicator for the official government jobs report released tomorrow, the two have been moving in the same direction as of late.
Today’s trading is a continuation, in part, of the rotation out of technology stocks and into more economically sensitive shares such as energy.
The stronger than expected ADP employment report is contributing to the lower share prices and higher bond yields by stoking fears of inflation, in our view.
As the labor market continues its march toward pre-pandemic levels, investors are nervous that rapid hiring could cause wage growth which could mean higher levels of inflation.
The Federal Reserve has indicated its willingness to stay accommodative even if inflation runs above the traditional 2 percent mark to support the labor market, stating interest rates would only increase sometime in 2023. All eyes will be on future commentary from the Fed as they interpret better-than-expected job growth and reassess the need for interest rate hikes.