Stock Market Improves But Still Shows Losses; AI Stock Palantir Takes A Break

The major stock market indexes all posted losses, but improved in afternoon trading on Thursday. The June ADP payroll numbers shook investors with the largest monthly increase since July 2022, sending fears of more rate hikes.

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The ADP private payroll number came in at an unexpectedly high 497,000 vs. the 235,000 Econoday consensus. This compares with a much lower revised 267,000 May payrolls number.

The June increase was led by robust hiring in the leisure and hospitality industries, with 232,000 new openings. Other strong areas included construction, transportation and utilities.

Initial jobless claims were 248,000 for the week ended July 1, vs. the 245,000 expected, and higher than the revised 236,000 in the prior week. The May job openings tallied a lower 9.824 million vs. the 9.9 million Econoday estimate.

The 10-year Treasury yield jumped 9 basis points to 4.04%, climbing above the 4% level for the first time since March. The CME FedWatch Tool showed over 90% odds for a quarter-point hike at the July 26 Fed meeting, higher than on Wednesday.

The labor data gave investors more reason to believe the Federal Reserve will raise rates at the July meeting, and perhaps longer.

The CME Fed Watch Tool now shows an over 60% chance of an additional quarter-point rate hike at the September Fed meeting.

Look for the June employment report on Friday at 8:30 a.m. ET. The June nonfarm payrolls estimate sits at a 213,000 rise, well below the 339,000 May number. Private payrolls are expected to increase 199,000 vs. 283,000 in May.

The June Institute for Supply Management (ISM) services index rose to 53.9 vs. the 50.8 forecast. A reading above 50 for the composite index shows that the services economy is expanding; below 50 indicates that it is contracting.

Major Indexes Lose Over 1%

The Nasdaq pulled back 1% in afternoon trading. The Dow Jones Industrial Average fell 1.1% and the S&P 500 shed 0.9%. The small-cap Russell 2000 fared worse and slid 1.9%.

The Nasdaq 100-tracking Invesco QQQ Trust ETF (QQQ) dropped 0.9%.

The Innovator IBD 50 ETF (FFTY) backed off…

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