Wall Street is celebrating its best week in two months because employers added barely half the jobs economists expected — and that tells you everything about who the Fed's economy actually serves.
The S&P 500 climbed 0.7% Thursday, the Dow surged 454 points, and traders now see an 80% chance the Federal Reserve skips a rate hike this month, according to CME Group data cited by Barchart. The catalyst? A Labor Department report showing just 57,000 jobs added in June — far short of the 100,000 to 115,000 economists predicted. May's numbers were also revised down from 172,000 to 129,000, Reuters reported. April and May payrolls were revised down by a combined 74,000 total, the New York Post confirmed.
Here's the perverse logic: weak job growth is Wall Street's good news. Fewer jobs means less wage pressure. Less wage pressure means the Fed can hold off on rate hikes. Lower rates mean cheaper money for investors and higher stock prices. The investor class gets richer; the working class stays stuck.
"The labor market isn't overheating," said Brian Jacobsen, chief economic strategist at Annex Wealth Management, per Barchart — framing anemic hiring as a gift to policymakers. Principal Asset Management's chief global strategist Seema Shah wrote that the slowdown "reinforces the view that the Federal Reserve is under little pressure to tighten policy," according to Reuters.
The New York Post, meanwhile, headlined the same feeble jobs number as hiring continuing "at a healthy clip" — a characterization that bears little resemblance to an economy adding 57,000 jobs when consensus expected double that. The Post did note the unemployment rate ticked down slightly to 4.2% from 4.3%.
The New York Times paywalled its analysis, offering readers a musing on Microsoft president Brad Smith and the Theodore Roosevelt Presidential Library before cutting off — a fitting metaphor for an institution more interested in insider cocktail chatter than what's happening to working Americans.
The federal funds rate sits at 3.50%-3.75%. Traders now price less than a 20% chance of a July hike, though September remains likely at roughly 60% odds, per Reuters. Oil prices have fallen to a four-month low — Brent crude at $70.82 — on hopes for negotiations to end the war with Iran, Barchart reported. That easing pressure is what gave the Fed room to pause.
The rally was broad: three in four S&P 500 stocks rose, with crypto leading the charge. Bitcoin climbed 4% toward $62,000. Robinhood gained 10.4%, Coinbase 8.5%. Meanwhile, the 10-year Treasury yield sat at 4.47% Thursday — up from 3.97% before the Iran conflict. That's the real cost of money for anyone buying a house or financing a small business.
Wall Street's celebration is built on a labor market that can't generate the jobs it was projected to — and on the assumption that workers won't see the wage growth they need to keep up with prices that never came back down. The question neither party in Washington wants to answer: when does an economy that works for shareholders start working for the people who actually show up to work?
