Wall Street’s three main indexes weakened last week even though the U.S. job market confirmed that the economy is on solid footing as the country reported that nonfarm payrolls rose more than expected in May.
The U.S. released the Nonfarm Payrolls report on Friday, which showed that the country added 390,000 jobs in May. The job report surpassed economists’ estimate of 325,000 for May, but the prospect of more Fed rate hikes continues to keep investors in a negative mood.
The report also showed solid wage gains last month, sketching a picture of a U.S. economy that continues to expand, albeit at a moderate pace. Ed Moya, the senior market analyst at OANDA, said:
Softer hiring and cooler wage data suggest that economic growth moderation is happening, but not fast enough to signal a change in course by the Fed.
The unemployment rate remained unchanged at 3.6%, which is also encouraging, but it is uncertain if this will continue.
Several financial institutes have downwardly revised the U.S. growth, and according to JP Morgan and Wells Fargo, the economy should grow at a slower pace than previously estimated.
Federal Reserve Chair Jerome Powell said that risk-aversion persists as growth and inflation data become more worrisome, while the tensions between Russia and western nations also negatively influence financial markets.
The U.S. Federal Reserve raised the interest rate by 50 bps in May, which was the first such increase in over twenty years, and investors currently expect 50-basis point rate hikes when policymakers meet this month and in July.
JP Morgan CEO Jamie Dimon warned about an economic “hurricane” on the horizon, while Tesla Chief Executive Elon Musk said that he has a “super bad feeling” about
