Just 57,000 jobs shook the whole week

Good morning. U.S. markets are closed on Sunday, so here is the week in review. The S&P 500 gained 1.7%, its best week in two months, and the Dow set a new record. The star of the show was the June jobs report, moved up a day for the July 4 holiday. It showed only 57,000 new jobs, far below forecasts.

That number took a lot of the worry out of a possible Fed rate hike. Even the lower jobless rate was a bit misleading, because more people simply gave up looking for work; the labor force participation rate fell to its lowest in 50 years outside the pandemic. New Fed chair Kevin Warsh restarted quantitative tightening, shrinking the Fed’s balance sheet, and investors are split on what his deliberate vagueness really means.

AI was where the cracks showed. Chip stocks fell 10% to 14% in two days, shaking a long rally. Most analysts see money rotating into other sectors rather than a recession signal. U.S. stock funds saw $17.2 billion in outflows over the week, the most since March.

Next week brings the Fed’s June minutes, and SpaceX joins the Nasdaq-100 on the 7th. OPEC+ also meets Sunday to decide on August output. For the record, global M&A hit a first-half record of $2.6 trillion.