SOTS 2nd Hour: ADP Jobs Breakdown, What it Means for Rates, & Vietnam Trade Deal Latest 7/2/25

SPEAKER_1 (0:00)

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Sara Eisen (0:47)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Sara Eisen with David Faber and Wilfred Frost here. We are live from Post 9 of New York Stock Exchange. Carl has the morning off. Stocks are not doing a whole lot of much. If you look at the major indexes, the S&P 500, little change. Nasdaq is getting a boost. So there's strength in tech today with the Nasdaq up a quarter of one percent. Dow Jones Industrial Averaged down 70 Waiting for word of whether the big, beautiful bill passes. Got the ADP private sector jobs we'll talk about. Take a look at Treasuries right now. And we are seeing kind of a mixed picture. The two-year yield is lower. 377, a little bit higher odds of a rate cut for July. That's reflected in the two-year. The rest of the curve a little bit firmer. Today, both Tesla and Rivian reporting delivery numbers. We've got a Rivian shareholder to talk about the news. And where else is he seeing opportunity right now? Plus, dividend hikes and buyback boosts coming from the financials. But we have a top analyst who says there's one bank name that is underappreciated in the sector. She'll reveal it coming up. Guys, we got the ADP job report. And remember, yesterday, I talked about some of the weakness that's happening in the job market. Well, put this report squarely in that category. We saw a negative number. It was actually a drop in private sector jobs, down 33,000 in June. Expectation was we would see a gain of almost 100,000. So that was a very big negative surprise. And here's a look at where the job losses were in the month of June. And I highlight it because it's a lot of the services sector, education and health. That was a big job creator over the last few months.

Financial activities, professional services. It speaks, the fact that it's concentrated in services, speaks to the underlying softness in the economy. It's not in manufacturing and goods, which would be more tariff driven, I think. It's in services. Now, one question is, does ADP correlate with NFP, the big jobs report that we're going to get tomorrow? It hasn't been a great correlation lately, but I think the trend usually follows each other and it's worth watching. The only other item I'd highlight, guys, in this report is that pay came down for both job switchers and job stayers. It's still a healthy level, but it's coming down, so not an inflationary worry there as well.

Wilfred Frost (2:59)

It's still a small number overall, but yeah, the direction is going to be interesting to watch. I go back to the point I said yesterday. As the data starts to turn, it almost hurts the chance of a rate cut if the president keeps making it so political.

Sara Eisen (3:14)

I think that Powell really does just tune out the noise. I think it doesn't matter if he calls on him for a rate cut or not. If the data points them to a rate cut in July, they'll cut in July. If the data points to September, they'll cut in September, at least if the data as interpreted by Fed Chair Powell and the rest of the committee.

Wilfred Frost (3:30)

Okay, well, let me put it the other way. If he gets a rate cut, the president will claim credit and say thank you, Mr. Powell, for your attention to this matter.

Sara Eisen (3:37)

For sure. But it might be, thank you to all the jobs.

David Faber (3:40)

Does Powell care about the ADP number or not really?

SPEAKER_6 (3:42)

And by the way, tomorrow's number, more tomorrow's number, for sure.

Sara Eisen (3:46)

Not as much. But I think that they have to look at a lot of different factors. You brought up immigration yesterday. So remember we got a strong job openings number. We were saying, oh, that's kind of strange because the trend had been weaker for job openings. Three quarters of the job openings came in the accommodation. So leisure and hospitality, that could be an immigration story, right? Where a lot of those workers have been deported.