Stock market today: Dow slips as slowing job growth fails to dent July hike bets

Investing.com -- The Dow notched a weekly loss after closing lower Friday as traders weighed a weaker monthly jobs report for June that missed estimates for the first time in 15 months against expectations that the Federal Reserve still remains likely to resume rate hike later this month.

The Dow Jones Industrial Average fell 0.55%, or 187 points, the Nasdaq fell 0.13%, and the S&P 500 fell 0.3%.

June payrolls miss expectations to fuel hopes of less hawkish Fed, but July Hike Still in Play

The economy created 209,000 jobs in June, missing the 225,000 expected and a marked decrease from the 306,000 in the prior month. That marked the weakest pace of job creation since December 2020.

But average hourly earnings, or wage growth, rose 4.4% last month, topping estimates of 4.2%

While expectations for a July hike remained baked in, investors are betting that the cooling in the labor market would be enough to keep the Fed from hiking again after July.

“Today’s report supports our view that the incoming data will not meet the bar for the Fed to deliver a hike in September,” Morgan Stanley said in a note.

The 2-year Treasury yield fell below 5%, but the 10-year yield held onto gains.

Energy stocks lead charge, Defensives Dive

Energy stocks were back in the driving seat, leading the broader market higher as expectations that a less hawkish Fed eased worries about a recession and the oil demand outlook.

Halliburton Company (NYSE:HAL), Diamondback Energy Inc (NASDAQ:FANG), and Schlumberger NV (NYSE:SLB) were among the biggest gainers with the latter up more than 8%.

Defensive concerns of the market including consumer staples and utilities were the biggest losers on the day, with latter dragged lower by Walmart Inc (NYSE:WMT) and Costco Wholesale (NASDAQ:COST).

Costco reported Thursday that comparable sales for June fell by 1.4%.

Levi flaunts unfashionable earnings as guidance cut

Levi Strauss (NYSE:LEVI) fell more than 7% after the denim retailer cut its annual earnings guidance after reporting quarterly results that showed a beat on earnings, but in-line sales amid a dip in wholesale revenue.

The company cut its guidance on adjusted diluted EPS for 2023 to a range of $1.10 to $1.20 from $1.30 to $1.40 and said it now expects revenue of growth of between 1.5% and 2.5% from 1.5% and 3% previously.

Pressure in U.S. wholesale is now resulting in some level of “pricing give-back in comparison to the growth achieved since pre-pandemic levels,”Goldman said after cutting its price target on the stock to $14 from $15.

Big movers: Rivian, Alibaba shine

Rivian Automotive Inc (NASDAQ:RIVN) climbed more than 14% after Wedbush upgraded its price target on the EV maker to $30 from $25 amid “further confidence in Rivian hitting/exceeding its delivery targets heading into 2H23 and 2024 with an inflection year ahead.”

The upgrade comes just days after the company reported that it had delivered 12,640 vehicles in the second quarter, beating market estimates.

Alibaba (NYSE:BABA), meanwhile, was up 8% as it moves a step closer to putting the regulator spotlight in China in the rearview mirror after its affiliate Ant Group received a $984 million fine from authorities.

Next week: Consumer inflation in focus

As the broader market ended the week in the red, the inflation report due Wednesday is likely to dominate investor attention as it is the last major release before the Fed's meeting on July 25-26.

Morgan Stanley said it expects core CPI to slow to 0.27% in June amid a "significant drop in core goods inflation driven by used vehicles."