Nasdaq and US Indices: Traders Look to Jobs Report for Clarity on Rate Path

Trade Tensions Resurface After Trump-Xi Phone Call

U.S. equities pulled back Thursday as traders digested renewed trade developments between Washington and Beijing. The S&P 500 and Nasdaq both slipped 0.2%, while the Dow lost 135 points, or 0.3%. Chinese state media reported that Presidents Trump and Xi spoke via phone—a move initiated by Trump, according to China’s foreign ministry.

While this sparked a brief bump in equities, investor focus remained locked on the potential for further deterioration in U.S.-China relations.

Markets had rallied sharply in May, with the S&P 500 posting a 6% gain and reaching a post-tariff high of 5,970.81 on Wednesday. But escalating geopolitical risk and a mixed labor market backdrop are now testing that momentum.

Mixed Economic Data Raises Stakes for Friday’s Payrolls

A wave of U.S. economic releases on Thursday sent conflicting signals. Initial jobless claims rose to 247,000, surpassing expectations, while ADP private payrolls added just 37,000 jobs in May, missing the 110,000 forecast. Meanwhile, unit labor costs jumped 6.6% in Q1 and productivity fell more than expected, increasing pressure on corporate margins.

The May trade deficit narrowed sharply to $61.6 billion—the largest monthly drop on record—driven by a 16.3% plunge in imports as firms unwound inventory buildup from earlier tariff fears.

These figures paint a mixed picture: wage pressures remain elevated even as job growth softens and global trade cools. All eyes are now on Friday’s nonfarm payrolls report, with a print below the 125,000 consensus likely to revive rate-cut speculation.

Tech, Retail, and Software Stocks Lead Sector Movers

Despite broader market softness, pockets of strength emerged in tech and consumer names. MongoDB surged 17% after blowing past earnings expectations, while Verint Systems jumped 18% on strong revenue and margin performance.

Budget retailer Five Below climbed 7% after posting upbeat guidance and Q1 results, while Lands’ End added 8% after outlining strategies to offset tariff pressure.

Planet Labs soared 20% after posting positive free cash flow for the first time.

On the downside, Brown-Forman plunged 10% following a revenue miss, and PVH slid 8% after cutting Q2 EPS guidance due to tariff costs.

Outlook: Jobs Data Will Guide Fed Expectations and Equity Direction

While the Nasdaq leads weekly gains with a 1.7% advance, short-term sentiment hinges on Friday’s labor print. A weak report could reinforce expectations for a Fed pivot and support risk assets. But if wage pressures persist without corresponding job growth, margin concerns could resurface. Traders are watching closely—especially with equities sitting near recent highs.

More Information in our Economic Calendar.