Dow futures drop 200 points after strong jobs report likely to keep Fed in hike mode

Cramer on why stocks are reacting negatively to the jobs report

“This number is extraordinary. We are a growing country. The rest of the world isn’t,” Jim Cramer said on CNBC’s “Squawk Box” after the strong report.

But Cramer cautioned about what it means for stock prices and explained why we’re seeing the negative reaction in futures.

“It means obviously when they (the Fed) come back, they’ll still be active, they’ll do another three-quarters of it,” Cramer said. “That’s not what we think. Remember that we bought this market with the idea that they are at 50 (basis points).”

After raising rates by 0.75 percentage point for the second time in a row last week, the central bank will meet to decide on interest rates in September. Traders had expected to slow the pace to a half point rise at that meeting. The S&P 500 is up 8% in the past month through Thursday’s close.

—John Melloy

Stock futures fall after better-than-expected jobs report

Stock futures fell on Friday after the jobs report for July was much stronger than expected, showing more jobs added, a lower unemployment rate and higher wage growth than economists had forecast.

Dow futures fell 231 points, or 0.71%. Futures pegged to the S&P 500 fell 1.08% and Nasdaq futures lost 1.33%.

—Carmen Reinicke

July jobs report crushes expectations

The US economy added far more jobs than expected last month. On Friday, the US government said 528,000 jobs were created in July, easily beating the Dow Jones estimate of 258,000.

To be sure, average hourly earnings were up 5.2% year over year, well above expectations. This could be seen by the market as a sign that inflationary pressures remain strong.

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fred imbert

Elon Musk thinks we have passed the peak of inflation

Elon Musk said he thinks we are past the peak of inflation and predicts a mild recession 18 months ahead.

musk comments came at Tesla’s 2022 shareholder meeting, held on August 4.

“We get a little bit of information about where the prices of things go over time because when you’re making millions of cars, you have to buy basic goods many months before they’re needed,” he said.

—Carmen Reinicke

Amazon to acquire iRobot in $1.7 billion deal

Amazon will acquire I robot for $61.00 per share, the consumer robot company announced Friday. the cash transaction is valued at approximately $1.7 billion, including iRobot’s net debt.

iRobot stock stopped on the news. The sale price of $61 per share is a 22% premium to Thursday’s close of $49.99. Amazon shares rose 0.2% in premarket trading.

—By Michelle Fox

DoorDash surges after record orders

A Doordash delivery man rides his bike in the rain during the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., November 13, 2020.

Carlos Allegri | Reuters

DoorDash shares rose more than 10% in premarket trading on Friday after the company reported quarterly results that exceed expectations after the market close on Thursday. The food delivery service said orders grew 23% in the last quarter of the year and revenue rose 30%.

The company expects softer consumer spending in the second half of the year, it said.

—Carmen Reinicke

Oil set for heavy weekly losses

Oil prices were moderately lower during Friday morning trading on Wall Street and on track for steep weekly losses. Concerns about a slowdown in demand have pushed prices down in recent sessions.

West Texas Intermediate Crude Futuresthe US oil benchmark, is down 10.5% for the week, while the international benchmark Brent Crude has lost 14.5%.

—Pippa Stevens

Bitcoin, Ether on track for worst week since July 1

Cryptocurrencies have plunged this week after a rocky start to the month. Bitcoin and Ether are down around 3% week to date and are on track to post their first negative week in five.

The performance would also be the worst weekly drop since July 1, when Bitcoin lost 8.71% and Ether lost 13%.

—Carmen Reinicke

Warner Bros. sinks

Leslie Grace attends the Warner Bros. Premiere of “The Suicide Squad” at The Landmark Westwood on August 2, 2021 in Los Angeles, California.

Axelle/bauer-griffin | Cinematic Magic | fake images

Stifel raises S&P 500 second-half target

Stifel’s Barry Bannister raised his S&P 500 second-half target to 4,400 from 4,200, saying he still favors cyclical growth stocks in sectors such as software and media.

Here are two reasons Bannister gave for his target hit:

  • The “S&P 500 sell-off in the first half of 2022 is still reversing.”
  • “The S&P 500 also discounts the negative year-over-year S&P 500 EPS in 2022, but we see 2022 EPS holding up.”

Bannister’s new target implies a 6% rise from Thursday’s close.

fred imbert

European stocks stall ahead of key US jobs report.

european markets were flat on Friday morning as investors followed corporate earnings and awaited the key US jobs report.

the pan-european Stoxx 600 it was little changed in early trade. Autos gained 0.8%, while insurance stocks fell 0.8%.

Earnings continue to drive individual stock price movement in Europe. Allianz, Deutsche Post, the London Stock Exchange Group and WPP were among the companies reporting before the bell on Friday.

-Elliot Smith

Asian markets brush off fears over military tensions over Taiwan

Asia-Pacific markets rose on Friday as investors brushed off fears over China’s military exercises near Taiwan, which follow US House Speaker Nancy Pelosi’s visit to the self-governing island this week.

MSCI’s broader index of Asia-Pacific shares outside of Japan rose 0.74%. Mainland China’s Shanghai Composite gained 0.28% and the Shenzhen Component rose 0.64%.

The Taiex in Taiwan jumped more than 2%, with chipmaker TSMC rising 2.8%.

A lower number of jobs does not mean a weaker economy, says an investor

If Friday’s jobs report shows the US economy added fewer workers in July than the previous month, it’s not necessarily a sign of economic weakness, according to Brad McMillan, CIO of Commonwealth Financial Network.

“If we see a reduction in hiring, even in the number expected, it seems much more likely to be due to a shortage of workers, rather than a sudden impact on labor demand,” McMillan said in a note. “With strong demand, what matters here is the availability of labor.”

—YunLi

Some on Wall Street don’t think the comeback rally can be sustained

The Federal Reserve’s commitment to reduce inflation and ease recession fears has sparked a relief rally in the market. the S&P 500 it is now 14.2% above its 52-week intraday low of 3,636.87 from June 17. The benchmark index is also coming off its best month since November 2020, gaining more than 9% in July.

However, some on Wall Street are skeptical that the rally can be sustained for much longer. Max Kettner, chief multi-asset strategist at HSBC Bank, said the return is “illusions”, and you would need to see a further price revision of rate hike expectations and another sharp drop in real yields to believe it.

widely followed Morgan Stanley’s Mike Wilson he also called this rally short-lived as corporate profits are starting to deteriorate.

Consumer discretionary leading gains, energy lagged most this week so far

Six of the 11 S&P 500 sectors were in the green week to date, led by consumer discretionary, which is up 2.9%.

The most negative sector this week has been energy, which has fallen more than 8% and is on track for its worst week since June 17. The drop in energy names came amid a drop in oil prices. WTI is down more than 10% this week, on pace for its worst week since April.

—YunLi

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