The New York Stock Exchange did not welcome the opening of strong American employment figures while Elon Musk and “his bad feeling about the economy” weighed on technology stocks. Around 2:10 p.m. GMT, the Dow Jones index lost 0.65%, the Nasdaq with strong technological coloring, dropped 1.79% and the S&P 500 1.20%.
The US economy created more jobs than expected with 390,000 new hires in May and the unemployment rate remained at 3.6%, close to its lowest in fifty years. With widespread job gains in many sectors – except in retail – this report “is not going to stop the Fed from raising rates by 50 basis points for the next two meetings”commented Michael Pearce of Capital Economics.
This is what worried the market among others on Friday.
“This report is too good to convince the market that the Fed will pause rate hikes after its planned 50 basis point hikes in June and July.”, also noted Patrick O’Hare, of Briefing.com. Investors reacted by getting out of bonds, which pushed yields on Treasury bills to almost 3% before stabilizing at 2.94% against 2.90% the day before. In less than two weeks, the US Federal Reserve is expected to raise interest rates again by half a percentage point, and probably in July as well, according to officials’ indications. But the markets wonder what the Central Bank will do in September.
Grimace soup for tech stocks
On the tech front, investor sentiment was dampened ahead of the opening by news reports that Tesla boss Elon Musk talked about a 10% cut in his group’s workforce. In an email to executives, the billionaire said he had “a really bad feeling about the economy”request “suspend all hiring worldwide” and evoked a reduction of 10% of the personnel of the company which employs a little more than 100,000 people.
The title of the electric car manufacturer fell 7% to 720 dollars, leading to a decline in the big names in tech. Google, Apple, Facebook (Meta) all lost more than 2%.
In the electric vehicle sector, Rivian dropped 3.38% and Lucid 3.56%.“The gloomy outlook presented by Elon Musk… comes on the heels of comments from other business leaders who also gave a pessimistic assessment of the economy, such as JPMorgan CEO Jamie Dimon.”noted Wells Fargo analysts.
On the side, the largest cryptocurrency platform in the United States, Coinbase, plunged 7% to 68 dollars having, as Tesla intends, imposed a hiring freeze. Bitcoin also slipped back below $30,000 (-1.96%).