Good morning! The S&P 500 closed at another record Wednesday. Today’s shortened trading day ends at 1 PM in New York, and then markets will be closed Friday for July 4th.

But before we log off for the long weekend, we have a critical jobs report to unpack.

June jobs pressure the Fed

The job market has weakened all year and now investors are waiting for the Fed to catch up.

Despite growing evidence of labor market cooling, the central bank has yet to cut interest rates in 2025. Markets are pricing in roughly two cuts before year-end, but a weak June jobs report could force policymakers off the sidelines sooner than expected.

On Wednesday, ADP payrolls showed a surprise decline of 33,000 private-sector jobs in June, a wide miss from the 98,000 gain economists forecasted.

It’s only the second negative print since 2020, and most of the losses came from small businesses. 

Meanwhile, job openings jumped to 7.8 million in May, and continuing claims just hit their highest level since 2021.

That mix — fewer hires, more openings, and rising unemployment claims — sets the stage for a potential negative surprise on today’s jobs report.

• Economists expect 115,000 new payrolls for June, down from 139,000 in May 

• Unemployment rate is seen rising to 4.3% from 4.2%, per FactSet

If the last two years are any indication, we’re likely to see Thursday’s numbers get revised lower a few months down the line. 

This isn’t exactly a labor market in free fall, but the trend is clearly downward.

Of course, it’s happening against a backdrop of record stock prices, though much of that enthusiasm stems from hopes of imminent rate cuts.

“The stock market seems to be carefree,” said Ed Yardeni, founder of Yardeni Research. “Investors likely figure that any signs of slower economic growth increase the odds that the Fed will ease.”

Yet it looser monetary policy doesn’t arrive soon — or if the jobs market weakens further — that optimism could lose steam.

After all, traders still have to reconcile stocks’ expensive valuations and ongoing geopolitical risks. 

To Comerica’s chief economist Bill Adams, immigration remains a wild card for jobs. 

On account of the White House’s crackdown, he said the unemployment rate may actually rise slower than expected, though not because of strong hiring.  

“Foreign-born workers accounted for four fifths of labor force growth between early 2020 and early 2025,” Adams said.

“Without their contribution to the ranks of jobseekers, the labor force would have only grown by about 20,000 per month over that period.”

Market snapshot

Elsewhere

🤝The US and Vietnam signed a tariff deal. President Trump said US goods will enter Vietnam without tariffs. In return the US will charge 20% on Vietnamese goods, down from the 46% tariffs he announced in April: “It will be a Great Deal of Cooperation between our two Countries.” (WSJ)

📊 Tesla stock climbed despite weaker delivery numbers. The company announced global vehicle sales fell more than 13.5% in the second quarter, yet investors piled into the stock. Tesla delivered 384,122 cars in the quarter, missing expectations for 387,000. (Barron’s)

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Rapid-fire

• Microsoft is laying off about 9,000 employees or 4% of its workforce (AP)

• Stocks tied to the price of ether rallied Wednesday on fresh enthusiasm for crypto (CNBC)

• Ripple has applied for a US banking license, which would place its dollar-backed stablecoin under regulations (WSJ)

• AI is automating mediocrity out of the job market (Blog)

• Robinhood stock has gained more than 30% since being snubbed from the S&P 500 (CNBC)

• The Nasdaq is still far from “bubble” status (Barron’s)

• Most stocks in the Russell 1000 are starting the new quarter strong (MoneyShow)

• The US dollar continues to weaken and that’s a structural tailwind for bitcoin (Pomp Letter)

Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].