Investing.com-- The S&P 500 closed the week higher despite closing lower Friday following a surge in Treasury yields after a stronger-than-expected jobs report cooled optimism on sooner rather later Federal Reserve rate cuts.
At 16:00 (20:00 GMT), the S&P 500 closed 0.1% lower after hitting a record high intraday of 5,375.65, the NASDAQ Composite fell 0.3%, and Dow Jones Industrial Average fell 87 points, or 0.2%,
Treasury yields rise as strong nonfarm payrolls dents rate-cut bets
Treasury yields jumped sharply after data showed the U.S. economy added more jobs than expected last month, with nonfarm payrolls rising by 272,000 in May, surging from April’s revised lower 165,000 release. Economists had called for a reading of 182,000.
Average hourly earnings grew by 0.4% month-on-month, rising from 0.2% in April and above projections of 0.3%, stoking fresh concerns about inflation, while unemployment rate rose to 4.0%, above the expected 3.9%.
Signs of strength in the labor market forced traders to peg back bets on a September rate, which now stands at 45% from 55% a day earlier, according to Investing.com's Fed Rate Monitor Tool, just ahead of the Fed's meeting next week.
"The FOMC is widely expected to leave policy unchanged next Wednesday," Scotiabank economics said, adding that it expected the Fed to lower its forecast on rate cuts for this to two cuts from three previously. "A September cut remains our base case for the first move this year," it added.
"We are impressed by the strong performance which reaffirms our belief in the long term setup for durable growth and margin expansion [for Samsara], Truist Securities said in a note, but said that "at current valuations, we cannot justify putting new money to work at current prices."
GameStop slumps after weak first quarter
In the corporate sector, GameStop (NYSE:GME) stock plunged 39% after the video game retailer reported weaker-than-expected first quarter results and said it would sell up to another 75 million shares.
Samsara Inc (NYSE:IOT) fell 11% even as the software maker reported better-than-expected Q1 results, with some on Wall Street wary of its current valuation.
Software firm DocuSign (NASDAQ:DOCU) fell more than 5% even as it delivered better-than-expected first quarter earnings and in-line guidance for Q2.
On the flip side, Lyft (NASDAQ:LYFT) closed 0.6% lower after the ride-hailing company announced it was expecting gross bookings to grow about 15% at a compound annual rate over the next three years.
(Peter Nurse, Ambar Warrick contributed to this article.)