Jobs growth disappoints, yet the Dow hits a record

Good morning. The U.S. added just 57,000 jobs in June, well short of forecasts, though the unemployment rate edged down to 4.2%. Hiring has cooled after running hot, but it hasn’t fallen off a cliff, and markets read it as a gentle slowdown.

Investors liked the report for one reason: interest rates. A cooler job market means less fuel for inflation, which eases pressure on the Fed to hike. Treasuries rallied on that hope. Under the surface, the share of Americans in the labor force fell to its lowest in 50 years outside the pandemic, and President Trump publicly leaned on the Fed to cut rates.

Stocks reflected the mood. The Dow rose more than 250 points to a fresh record, while the Nasdaq slipped on weak tech and the major indexes finished mixed. The bigger story is where the money is going: out of expensive tech and chip stocks and into small caps, value stocks and materials.

One more thing to watch. A heat wave is straining the country’s biggest power grid, and the Energy Department told data centers to switch to backup power. The AI boom is running into the limits of the grid.