Stocks close lower amid investor concerns of imminent Fed rate hikes

Stocks fell on Friday, and finished lower for the week, as Wall Street struggled to shake off fears that the Federal Reserve may start hiking rates again later this month.

All three major averages capped a losing week. The S&P dropped 1.16 per cent, while the Nasdaq declined 0.92 per cent. The Dow shed 1.96 per cent for its worst weekly performance since March

Overall, The S&P 500 lost 0.29 per cent to end at 4,398.95, while the Nasdaq Composite dipped 0.13 per cent to close at 13,660.72. The Dow Jones Industrial Average dropped 187.38 points, or 0.55 per cent, to settle at 33,734.88.

The Labor Department’s June jobs report showed payrolls increased less than expected, cooling down from May. Nonfarm payrolls rose by 209,000, while the unemployment rate came in at 3.6 per cent. Economists polled by Dow Jones had anticipated 240,000 positions added and a similar jobless level.

But parts of the report, including stronger-than-expected wage numbers, heightened fears that the central bank may have reason to resume hiking later this month. Average hourly earnings increased by 0.4 per cent in June and 4.4 per cent from a year ago. Meanwhile, the unemployment rate declined from 3.7 per cent in May.

Following Friday’s big data release, traders kept their bets on a resumption in hiking later this month, pricing in a 92 per cent chance of a quarter-point hike on July 26. Those are about the same odds as a day ago, according to CME Group’s FedWatch tool. Policymakers indicated at their June gathering that two more rate hikes could be ahead in 2023.

In company news, Rivian Automotive surged over 14 per cent as Wedbush raised its price target, implying a potential 39 per cent rally.

Levi Strauss shares dropped 7 per cent after lowering its full-year profit forecast, while

First Solar rose 3.3 per cent following a five-year revolving line of credit and a $1 billion facility guarantee.

In EV related news, US electric vehicle sales reached 4 million by the end of June, driven by price cuts at Tesla and Ford, tax credits for consumers, and increased manufacturing capacity, according to Atlas Public Policy. Tesla dominates the market with a 61 per cent share, while EVs still account for less than 10 per cent of new vehicle sales, although rising sales are making them more mainstream.

Oil prices rose for a second consecutive week as OPEC+ supply cuts and increased demand led to higher prices and a bullish market, while Saudi Arabia's price increases and the search for alternative options caused Norway's North Sea crude price to surge, though global factors continue to impact oil futures.

Overall, US sectors were mixed on Friday. Energy was the best performer, largely due to the rise in Oil prices, whilst Consumer Staples was the worst.

Futures

The SPI futures are pointing to a 0.36 per cent gain.

Currency

One Australian dollar at 7:30 AM was buying 66.89 US cents.

Commodities

Gold added 0.89 cent. Silver gained 1.74 per cent. Copper rose 1.27 per cent. Oil gained 2.87 per cent.

Figures around the globe

European markets closed mixed. London’s FTSE lost 0.32 per cent, Frankfurt added 0.48 per cent, and Paris closed 0.42 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei lost 1.17 per cent, Hong Kong’s Hang Seng lost 0.90 per cent and China’s Shanghai Composite closed 0.28 per cent lower.

On Friday, the Australian sharemarket closed 1.69 per cent lower at 7042.

Ex-dividends

Collins Foods (ASX:CKF) is paying 15 cents fully franked
Red Hill Minerals (ASX:RHI) is paying 10 cents fully franked
Turners Automotive (ASX:TRA) is paying 6.6118 85 per cent franked

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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