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The US economy gained 4.8 million jobs in June, beating expectations but data is from early June when the American country was reopening at a rapid pace. With a long weekend ahead, S&P 500 could suffer a pullback on Monday as investors digest the figures, FXStreet’s analyst Yohay Elam reports.

Key quotes

“The US economy gained 4.8 million jobs in June, better than three million expected, and on top of 90,000 added in revisions to previous months. The Unemployment Rate fell to 11.1%. That came on top of an increase in the participation rate from 60.8% to 61.5%. So far, everything looks upbeat. However, accounting for misclassification issues, the jobless rate would have been 12.1%. The U-6 ‘real unemployment rate’ dropped to 18%, still an elevated level.”

“High-frequency data suggests the economic situation has already begun deteriorating during June. The Nonfarm Payrolls report is far from being outdated – it shows a high watermark for the economy after the first wave. That peak is far off the pre-pandemic levels and is where the downturn begins.”

“After stock markets staged a rally worth around 20% – the best since 1998 – there is a case for a downside correction. Americans now enjoy a long Independence Day weekend, allowing investors to digest everything. In the meantime, COVID-19 cases will likely continue rising. Will stocks suffer a day of reckoning on Monday? We will know soon enough.”