Stocks end slightly lower after strong jobs report puts Fed rate cuts in question

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Slight stock-market declines Friday leave indexes in black for week

U.S. stocks closed slightly lower Friday, though above session lows, after the monthly government payrolls report estimated the economy added a better-than-expected 224,000 jobs in June, reducing the chances of multiple Federal Reserve rate cuts by the end of the year.

The trio of equity gauges finished at all-time highs on the same day for the first time since Jan. 26, 2018, according to Dow Jones Market Data. Before the jobs release, Wall Street, as gauged by CME Group data, was pricing in a near-certain reduction of rates, with the market placing a 25% probability that the Fed will cut rates by 50 basis points, rather than its typical 25, later this month. After the release, the probability of a 50 basis point cut fell to 5.9%, though expectations for a cut of at least a quarter-point remained at 100%.

Also on investors’ radar were ongoing trade negotiations between the U.S. and China. Markets rallied earlier this week on the news that President Trump and Chinese President Xi Jinping had agreed to restart trade negotiation and Chinese purchases of U.S. agricultural products, while the U.S. pledged to not implement new tariffs and to allow U.S. tech companies to sell some goods to Chinese telecom giant Huawei Technologies Inc.

Which stocks were in focus? Semiconductor stocks were under pressure Friday, after South Korean smartphone and chip maker Samsung Electronics Co. Ltd. 005930, -0.76% warned of a 56% decline in second-quarter profits, suggesting broader weakness in chip demand.

 

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