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Dow falls on fixed jobs reports, because good news is bad news for stocks

S & P 500 and Nasdaq each fell about 0.9%. All three indices closed at record highs in a shortened trading session on Wednesday. US markets were closed on Thursday, July 4.

"This month's strong job report is definitely uplifting after we saw such disappointing figures in May and shows that the labor market still has a lot of struggle left," said Steve Rick, chief economist at CUNA Mutual Group, in a report on Friday morning . "The economy is still healthy right now, despite some concerns rising from shakier, more volatile markets."

But the big rise in job growth – only 72,000 jobs were put in May according to revised figures released Friday ̵[ads1]1; may complicate the Fed's picture.

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As recently as June 20, investors were priced at nearly 40% chance of an aggressive half-frequency cut at Fed's next meeting on July 31, according to futures traded on the Chicago Mercantile Exchange.

After Friday's job report, the probability of a half-stroke fell to 6%.

"The plot thicker with respect to the Federal Reserve's decision on interest rates at the end of this month," said Mark Hamrick, senior financial analyst with, in a report.

Nevertheless, the Fed is very unlikely to just sit close to its next meeting. Investors are still concerned about the US multi-front trade war and the impact of China and Europe's economies.

Hamrick said the Fed could "still try to mollify investors by putting a modest, so-called insurance cut in place. The range of headwinds associated with slowing global growth, trade disputes and tariffs has not gone away."

] Investors still believe that there is a 100% chance of at least one quarter rate cut by the Fed on 31 July.

But the reduced probability of a large interest rate increase increased the bank portfolio, as higher interest rates increase the profitability of banks' lending activities.

Bank of America ( BAC ) Citigroup ( C ] Goldman Sachs ( ] [) JPMorgan Chase ( JPM ) Morgan Stanley 19659014] MS ) and even troubled Wells Fargo ( WFC ) were all higher.

Bond yields also spiked after the job report. The interest rate on the benchmark portfolio The 10-year US Treasury rose above 2%. The US dollar rally too, as it usually does after solid domestic economic reports.

Gold prices, which have increased recently partly due to expectations of a slower global economy, fell Friday.

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