White House Reaction to the Jobs Report, Tech Surges and Nasdaq Makes History, Tesla's Big Week 7/5/24

David Faber (0:00)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street. Good Friday morning. Welcome to Squawk on the Street. I'm David Faber with Leslie Picker and Mike Santoli. We're live from Postline at the New York Stock Exchange. You just had a look at futures. Joe called it riveting.

Tend to agree, yeah, that's really, that's very exciting right there.

But our show will be exciting, unlike perhaps what the market looks like.

Mike Santoli (0:24)

So, you know, that's riveting, even if it's not moving much.

David Faber (0:27)

If it's getting Mike Santoli excited, then you know you got something going on. Let's get to our roadmap. It does begin with continued job market resilience, not slowing the tech stock rally, Microsoft, Amazon and Alphabet, all set to notch new highs at the opening.

Leslie Picker (0:41)

Plus, Tesla's bounce back shares rallying again on track for an eight day win streak. It's the longest since June of last year. And the Labour landslide, the UK's opposition party winning a huge parliamentary majority in the country's general election, unseating the Conservatives after 14 years.

David Faber (1:00)

All right, let's get to that June employment report. Non-farm payrolls rose by 206,000. That was ahead of forecast. Job growth estimates for May and April, though, were revised downward.

The combination there of those two months, 111,000 fewer jobs than had been previously reported. The unemployment rate hit 4.1%. And according to Rick Santoli when I was listening earlier, the last time we saw that number, or that high, was November of 21

Looking through the report as well, and obviously they analyzed it at length on Squawk Box, 74% of the jobs, government, education and healthcare. And Mike, listen, we've been paying attention, of course, to yields in the bond market this week in terms of potential tell. I'm curious to sort of get your take on both the employment report and the impact on the bond market and hence the stock market.

Mike Santoli (1:50)

Yeah, the net takeaway is it's softer than not under the surface. So the downward revisions to the prior two months of more than 100,000 jobs, there had been this somewhat perceived disconnect between the payroll report and the household report. Household, which drives unemployment rate somewhat weaker. So there's been a little bit of convergence there.

Yeah, private sector job creation was below expectations. Average hourly earnings softened up. So in general, it still paints the picture of a cooling labor market.

Bond market immediate reaction was yields rushed lower. Now, not to anything alarming, but basically two-year yield down at 4.64, something like that. It's like where it was three months ago. So you had this little bit of a scare that maybe it was going to be this higher-for-longer story. It really does intensify the what should the Fed do in the July meeting, perhaps to set the stage for a September rate cut. I think you're starting to have that chorus sing a little bit more loudly in the sense that the preference is for the Fed to be somewhat orderly and proactive and deliberate in how it decides to ease off of these restrictive levels of rates. It still says it's restrictive. And you'd want to go sooner than later so you're not rushing to rescue an economy that's really in trouble. I keep measuring things market-wise and economy-wise by the magic desired 1995 soft landing scenario. That's always been the idealized version of how you do it because unemployment actually didn't go up during the tightening cycle back then. It really didn't go up this time during the tightening cycle. You had two quarters of stalling economic growth in 95

Sub 2%. In fact, I think one, an initial report was below 1%. And so there was a growth scare.

One cut, then another one several months later. It wasn't really a big easing cycle. It was just taking the pressure off. And of course, equities were at all-time highs, as they are right now. And so this general sense of, you know, you can kind of loosen things up while you have the luxury of an economy that's still functioning pretty well near full employment.

Leslie Picker (3:51)

Yeah, another concern that people are pointing to was temporary help, declining 49K in June. And the swaps market, to your point, now predicting 72% probability for a rate cut in September, which, of course, we've seen this movie before with the swaps market being wrong in terms of when to expect rate cuts. But notable that you believe that there was potentially enough kind of friction in this report to suggest that September is still a likelihood.

Mike Santoli (4:20)