Key Takeaways
- US private payrolls grew by only 98,000 in June, falling significantly short of the 120,000 estimate and signaling a cooling labor market.
- Spot gold prices surged 0.5% to $4,025 per ounce as investors reacted to the weak employment data, reinforcing expectations for a potential shift in Federal Reserve policy.
- Nike (NKE) shares tumbled 2.5% in pre-market trading following a cautious sales outlook and a double-digit revenue decline in China.
- Microsoft (MSFT) announced plans for fresh job cuts impacting less than 2.5% of its workforce as it prioritizes AI infrastructure spending.
- Kroger (KR) reached a definitive agreement to acquire Giant Eagle for $1.65 billion, expanding its footprint in the Midwest and Mid-Atlantic regions.
Labor Market and Commodities
The U.S. private sector added just 98,000 jobs in June, according to the latest ADP National Employment Report. This figure came in well below the consensus estimate of 120,000 and marked a slowdown from the 122,000 jobs added in the previous month. The cooling labor demand provided an immediate tailwind for precious metals, with Spot Gold rising 0.5% to hit $4,025 per ounce shortly after the release.
Corporate Earnings and Strategic Moves
Nike (NKE) faced significant pressure as its fourth-quarter results revealed ongoing weakness in Greater China, where sales fell as much as 17% on a constant-currency basis. Despite a modest revenue beat, the company warned that turnover is expected to decline through the first half of fiscal 2027. Meanwhile, Microsoft (MSFT) is moving to trim its headcount by thousands of roles, specifically targeting sales, consulting, and its Xbox gaming division, even as it ramps up capital expenditure for AI.
In the retail sector, Kroger (KR) is set to acquire Giant Eagle in a deal valued at $1.65 billion. The acquisition includes 197 supermarkets and 11 pharmacies, strengthening Kroger's presence in Ohio, Pennsylvania, and West Virginia. The transaction is expected to close in 2027.
AI Infrastructure and Market Sentiment
Bloom Energy (BE) saw its stock jump 7.5% after expanding its AI infrastructure power partnership with Brookfield to $25 billion, a massive increase from the previous $5 billion framework. This expansion highlights the surging demand for onsite power solutions to support global data center growth. Conversely, Caterpillar (CAT) shares fell 2.5% after famed investor Michael Burry disclosed a short position in the company, citing extreme valuations and its status as an "AI infrastructure proxy."
In M&A news, Getty Images (GETY) and Shutterstock (SSTK) have terminated their planned $3.7 billion merger. The decision followed a UK Competition and Markets Authority (CMA) ruling that would have required the sale of Shutterstock’s editorial business. Following the announcement, Shutterstock shares plummeted 32% in pre-market trading.
International Developments
On the geopolitical front, EU's António Costa indicated that Montenegro's accession talks could be completed by 2026. This development marks a significant step forward for EU enlargement in the Western Balkans, with Montenegro potentially becoming the 28th member state by 2028.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.