By: Bithi
Published on: Jun 05, 2025
The U.S. stock market opened Thursday to a mix of volatility and cautious optimism as investors digested fresh labor market data that sent conflicting signals about the health of the U.S. economy. While jobless claims rose unexpectedly and the ADP payroll report missed estimates by a wide margin, major indexes managed to edge higher in early trading.
Tesla (TSLA), however, continued to face heavy selling pressure, extending its losses from Wednesday as broader investor sentiment weighed on high-growth technology stocks.
The Department of Labor reported that weekly jobless claims rose to 247,000, up from 240,000 the previous week. This defied economists’ expectations of a drop to 235,000. The increase suggests a cooling labor market, with more individuals filing for unemployment benefits than previously anticipated.
This data adds to mounting evidence that the labor market may be softening more than Federal Reserve officials had expected, intensifying the debate over future interest rate cuts.
Continuing claims, which track those receiving benefits for more than a week, have also trended higher, reinforcing the view that employers are slowing their hiring pace amid economic uncertainty.
On Wednesday, Automated Data Processing (ADP) released its private payroll report for May, showing a gain of just 37,000 jobs, far short of the expected 110,000. This marked one of the weakest monthly increases in private employment in recent years and immediately raised red flags for Friday’s highly anticipated nonfarm payrolls report from the Bureau of Labor Statistics (BLS).
The ADP miss sparked political and market responses, most notably from President Donald Trump, who criticized Federal Reserve Chairman Jerome Powell on Truth Social.
"ADP NUMBER OUT!!! 'Too Late' Powell must now LOWER THE RATE," Trump wrote, adding: "He is unbelievable," while comparing the Fed unfavorably to the European Central Bank, which has enacted nine rate cuts.
Tesla (TSLA) stock continued its descent on Thursday, falling another 2.3% in premarket trading, following a 3.6% decline on Wednesday. The electric vehicle giant has now fallen below its key technical support at $354.99, a crucial handle entry level listed on the IBD Leaderboard.
Investors are increasingly concerned about softening demand, margin pressures, and the company’s exposure to high interest rates, which have a disproportionate impact on high-growth companies with future-dependent earnings projections.
Tesla's weakness also reflects a broader downward shift in tech sentiment, as investors rotate into more defensive sectors amid macroeconomic uncertainty.
Despite the disappointing labor data, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all opened higher. Analysts attribute the move to increased expectations of Federal Reserve rate cuts, which could provide a cushion to equities.
Dow Jones: +0.4%
S&P 500: +0.5%
Nasdaq: +0.3%
Russell 2000: +0.6%
Investors appear to be betting that bad news on jobs will push the Fed toward a more dovish stance, potentially easing monetary policy sooner than expected.
Several companies reported earnings Thursday morning:
Reported earnings beat expectations
Stock rose 1% in premarket trading
Strong performance in the engineering and construction segment
Missed earnings estimates
Stock plunged nearly 8%
Weak forward guidance triggered sell-off in telecom hardware peers
Beat both top and bottom line
Stock jumped 6% in early trading
Investors praised the retailer’s resilience in a tough economic environment
Thursday’s jobless claims and Wednesday’s ADP report raise serious questions about the trajectory of the U.S. labor market. For Fed officials, these reports serve as a double-edged sword:
On one hand, slower job growth and rising claims indicate that the economy may be weakening, which could justify a rate cut to prevent a recession.
On the other hand, the Fed may prefer to wait until core inflation trends lower before acting, especially as some services inflation remains sticky.
Currently, the CME FedWatch Tool shows that futures traders are pricing in a 65% chance of a rate cut by the September FOMC meeting.
All eyes now turn to Friday’s official nonfarm payrolls report from the Bureau of Labor Statistics. The consensus forecast is for a gain of 180,000 jobs in May, with the unemployment rate expected to remain steady at 3.9%.
A major downside surprise could trigger:
A rally in stocks as rate cut bets increase
A drop in Treasury yields
Increased volatility in the U.S. dollar
However, a stronger-than-expected report might reinvigorate hawkish Fed concerns, pushing equities lower.
With data volatility increasing and policy uncertainty rising, investors are advised to remain flexible in their strategy:
Defensive sectors like healthcare, consumer staples, and utilities have outperformed amid macro headwinds.
Growth names are vulnerable unless the Fed clearly signals an easing path.
Short-term traders may find opportunities in volatility spikes tied to economic reports.
Technical indicators show the S&P 500 hovering near resistance around 5,300, while the Nasdaq remains range-bound pending macro clarity.
The stock market’s resilience in the face of weak labor data highlights a delicate balance between economic risk and policy hope. While jobless claims and ADP payrolls show potential cracks in the employment foundation, markets are finding solace in the potential for interest rate relief.
Tesla’s continued slide serves as a warning sign that investors are becoming more selective, particularly among high-valuation stocks with rate sensitivity.
As the week’s marquee event—the May jobs report—looms, traders should brace for heightened volatility and rate-policy recalibration.
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