S&P 500, Nasdaq Trade Lower On Strong Payrolls Number, Fed Rate Hikes Seen As More Likely

Some may think strong payroll numbers would be good for the stock market. And usually, that would be right. But this morning, futures dipped sharply on a solid jobs report, nonfarm payrolls rose by 528,000 in July, crushing the estimates of 258,000. 

What Recession? The downward move is likely because investors see the strong jobs report as a sign that the Fed is able to continue its rate hikes. Wage growth also surged higher, a sign that inflation could still be getting worse. 

Related Link: US Adds 528K Jobs In July, Unemployment Returns To Pre-COVID Level: How It Could Affect Fed's Interest Rate Hikes

The CME Watch Tool, a tool that tracks the probability of Fed rate hikes, shows a sharp increase in the odds of another .75% hike in September’s meeting. Yesterday, the tool showed only a 34% chance of another .75% hike, but today those odds have shot up to 68.5%. 

The energy sector is performing well after the strong jobs report, with the Energy Select SPDR Fund XLE up more than 1.5% Friday morning. Consumer discretionary, a sector investors like to hide in times of recession, is today’s biggest laggard down 1.25% on the day. 

This morning before the bell, DraftKings Inc DKNG reported earnings and the stock skyrocketed on better-than-expected EPS numbers. The stock is currently trading around $19, still more than 70% down from its all-time-highs in the $70s.

See Also: Why DraftKings Stock Is Trading Higher

Photo: ranjith ravindran via Shutterstock