Another surprisingly strong jobs report pushed U.S. stocks even higher ahead of Independence Day despite its implications for monetary policy and future rate cuts.
The Big Beautiful Bill seems set to pass the House of Representatives by President Donald Trump’s July 4 deadline, a bit of historic fiscal policy to feed the bulls during Thursday’s week-ending rally.
Total nonfarm payrolls increased by 147,000 in June, the unemployment rate ticked lower to 4.1%, and the labor force participation rate was steady at 62.3%, the U.S. Bureau of Labor Statistics said before the opening bell.
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New hiring exceeded a FactSet-compiled median estimate of 115,000.
“The labor market continues to defy expectations,” writes Morgan Stanley Wealth Management Chief Economic Strategist Ellen Zentner. “Today’s stronger-than-expected jobs data highlighted ongoing U.S. economic resilience in the face of multiple challenges, but it also likely pulled the plug on a rate cut later this month.”
Price action in the federal funds futures market shows investors, traders and speculators pulling back their bets that the FOMC will cut interest rates at the next Fed meeting on July 29-30, as well as the one on September 16-17.
“This summer will be telling,” Zentner foreshadows, “as we see the extent to which tariffs impact prices, economic activity, and hiring.”
Trump vs Powell
“President Trump and his senior advisers have escalated an unusually severe pressure campaign on Powell and his colleagues to lower interest rates,” writes Nick Timiraos in The Wall Street Journal.
Indeed, Wednesday evening Trump took to Truth Social to twist the ratchet: “‘Too Late’ should resign immediately!!!” he posted, using his nickname for Fed Chair Jerome Powell.
The president added a link to a Bloomberg story headlined Fed Chair Should Be Investigated by Congress, FHFA Head Says.
Action in the bond market reflected more the interest rate outlook than the president’s ongoing attacks on the Federal Reserve.
But this kind of stuff tends to reduce the question, who will replace Jerome Powell as Fed chair? to not much more than a parlor game.
The yield on the 10-year U.S. Treasury note bounced to 4.364% from 4.249% in the immediate aftermath of the 8:30 am Eastern Standard Time BLS release but settled to 4.346% at last check. (The bond market will close at 2 pm EST Thursday.)
Still, the president’s attacks do have the market’s attention for their potential to undermine central bank independence. And that goes whether Trump fires Powell and whomever he nominates to succeed him.
“Be careful what you wish for,” especially if the market thinks monetary policy is going to be made in the White House.
Stay green, solar stocks
The Big Beautiful Bill itself is still hard to pin down. So any stock market impact is going to be fuzzy at best.
But we can make some general if early deductions, such as President Trump’s legislation is good for fission and fusion: Here’s how to invest in the nuclear revolution.
The VanEck Uranium and Nuclear ETF (NLR, +0.2%) inched up Thursday.
And top holdings Constellation Energy Group (CEG, +1.7%), which operates the largest fleet of nuclear generation capacity in the U.S., and Cameco (CCJ, +2.5%), the world’s largest publicly traded uranium producer, posted healthy gains.
Meanwhile, the Invesco Solar ETF (TAN, +4.8%) beat them all. Solar and wind stocks got a boost when the Senate stripped a provision to tax such renewable projects from the Big Beautiful Bill.
NextEra Energy (NEE, +1.2%), the largest renewables developer in the U.S., bounced after rising 5.2% Tuesday.
Still to be determined is a timeline for the end of tax credits for wind and solar projects.
Ten of the 11 stock market sectors, as defined by the Global Industry Classification System (GICS), were in the green, led by technology, financials and utilities, with consumer staples and health care stocks eking out gains too but materials down marginally.
As for the main indexes, the S&P 500 surged 0.8% to 6,279 and the Nasdaq Composite added 1.0% to 20,601 – extending their respective runs to new highs. The Dow Jones Industrial Average rose 0.8% to 44,828 – getting within 185 points of its own fresh high.
Note that both the stock and bond markets are closed Friday, July 4, a full stock market holiday in observance of Independence Day in the U.S.