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Stock market overview

S&P 500 index fell by 0.29% to 4,398 points by the end of last week’s trading. The June non-farm payrolls figures were the main driver of the decline in equity markets.

On the one hand, we witnessed an unexpected growth in average hourly earnings of 4.4% and 0.4% on the annual and monthly readings. This unexpected increase may lead to the continuation of inflationary pressures and push the Federal Reserve to carry out more interest rate hikes, which the markets have become more certain of with a probability of 92% that the Fed will raise the interest rate by 25 basis points at its next meeting on July 26.

On the other hand, concerns about the strength of the US labor market returned, with the US economy adding about 209 thousand jobs compared to an expected 225K, which is the lowest reading since December of 2021. These numbers came after the announcement of the weekly initial jobless claims’ figures, which came higher than expected. As well as the job openings figures for the month of May, which also came in below expectations.

Biotechnology stocks led the index’s losses, with declines in the stocks of Biogen, Merck and Eli Lilly, with declines of more than 2%. On the other hand, the oil and energy stocks supported the index, with collective gains as well, with oil prices rising to the highest levels since early June, with WTI futures contracts rising to $73.92 a barrel, at Friday’s peak.

The markets are preparing for the unofficial start of the corporate earnings season for the second quarter, which begins with the announcement of major US banks, whether from Citi Group and JPMorgan Chase, for their results next Friday.