July Jobs Report: Numbers to Watch

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A strong jobs report was not enough to keep markets in the green Friday morning, as U.S.-China tensions and continuing coronavirus relief negotiations led the Dow down 119 points. The S&P 500 and Nasdaq also fell into the red.

However, the U.S. added nearly 1.8 million nonfarm payrolls in July, according to the Labor Department, down significantly from breakout numbers in June, but still beating Wall Street estimates of 1.48 million. Wall Street also forecast unemployment at 10.6%, with the number actually at 10.2%.

"Much of the rally that we’ve seen so far has been fueled by Federal government stimulus and Federal Reserve liquidity, but for it to continue, the economy needs to continue to heal and the data this morning is adding credence to the idea that things are continuing to improve," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

Heading into the report, Jim Cramer said investors should closely analyze which sectors are adding and subtracting jobs in the month

The retail sector added 258,300 new jobs and construction added around 20,000. Leisure and hospitality added 598,000 new jobs, while the Labor Force Participation rate slipped to 61.4%. The pace of hiring has slowed amid increased coronavirus cases in the U.S.

"Investors will most likely cheer this employment report, but I think there are potential downside risks if the White House and Congress fail to make progress in their negotiations on another coronavirus relief bill," said Brian Price, head of investment management for Commonwealth Financial Network.

"It’s nice to see unemployment improve to around 10%, but the reality is that is a lot of Americans are struggling right now due to the pandemic and need assistance. The stakes are too high to not get a deal done and provide help to those in need."

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