Wall Street Brunch: Labor Market Getting Weaker?

Listen below or on the go on Apple Podcasts and Spotify

The following is an abridged transcript:

It’s jobs week again and traders get the numbers early due to the market holiday for Independence Day.

The markets are closed Friday July 4^th and will close at 1 p.m. on Thursday, the same day payrolls hit before the bell.

Economists expect that June nonfarm payrolls rose by 120,000, with the unemployment rate staying at 4.2% and average hourly earnings up 0.3%.

Wells Fargo Economists say: “The labor market is losing altitude. Although payrolls came in slightly better than expected in May, significant downward revisions to March and April unveiled a softer pace of expansion.”

“Looking through the household survey’s monthly noise, the softening in labor demand will likely keep the unemployment rate inching higher on trend,” they added. “The labor market’s gradual loosening has already eased the pressure on employers to hike wages.”

Also on the economic calendar, the ISM indexes for manufacturing and services are due, as well as factory orders and construction spending.

The earnings calendar remains light, but drinks company Constellation Brands (NYSE:STZ) is due to report on Tuesday.

EPS is expected to decline to $3.29 on a revenue of $2.56 billion. As the company continues to face growth stagnation and tariff headwinds, analysts expect outlook to be weak, with the wine and spirits segment struggling with double-digit revenue declines.

In the bear camp, SA analyst Luca Socci says valuation “appears stretched, with an intrinsic value below the current price and negative momentum increasing downside risk, especially before earnings.”

But SA analyst Jim Sloan is more optimistic, noting that Berkshire Hathaway bought a position in STZ in Q4 2024 and doubled it in Q1 2025, “seeing a solid value investment cheap because of temporary risks.”

Buffett or his lieutenants “considered it good value when buying it up to 10-15% down from the top, then saw nothing in the macro challenges to make (them) change (their) mind, and instead jumped on a chance to buy 114% more at prices 30% or so lower,”

Also on the earnings calendar:

Progress Software (PRGS) reports on Monday.

Joining Constellation Brands are MSC Industrial Direct (MSM) and The Greenbrier Companies (GBX).

UniFirst (UNF) weighs in on Wednesday.

In the news this weekend

Senate Republicans narrowly cleared a key hurdle late Saturday to keep President Trump’s ambitious tax and spending package alive, though the razor-thin vote exposed the political headaches that lie ahead for GOP leaders.

In a 51-49 vote, most Republicans backed the bill’s advancement, while Democrats uniformly opposed it. Senators Rand Paul (Republican, Kentucky) and Thom Tillis (Republican, North Carolina) broke with their party, voting no.

The bill runs nearly 1,000 pages and remains subject to revisions. Senate leaders hope to pass the legislation by Monday, aligning with Trump’s July 4 target to finalize the package.

And the FT reports that executives and board members at Nvidia (NVDA) sold more than $1 billion of company shares in the past year, the Financial Times reported Sunday, citing company filings. A significant portion of those sales occurring in recent weeks as investor excitement over artificial intelligence drives the stock to record highs.

Roughly $500 million in insider sales took place this month alone as Nvidia’s market valuation soared, cementing its position as the world’s most valuable company. The surge comes despite recent geopolitical headwinds, including escalating U.S.-China tensions and competition from Chinese AI developers, which had briefly weighed on the stock.

For income investors:

Deere (DE) goes ex-dividend on Monday, paying out on August 8.

Heico (HEI) goes ex-dividend on Tuesday, with a July 15 payout date.

Cisco (CSCO) and Progressive (PGR) go ex-dividend on Thursday. Cisco pays out on July 23 and Progressive pays out on July 11.

And in the Wall Street Research Corner, the S&P 500 (SP500) is on the cusp of the seventh breakout since 1990, according to BofA.

And strategist Michael Hartnett says this breakout has the smallest “breakout stock” participation.

Within the index, 22 stocks are currently at all-time highs compared to 67 during January 2024’s breakout, 54 during August 2020’s breakout, 97 during March 2013’s breakout, 82 during May 2007’s, 66 during November 1998’s, and 51 during February 1991’s breakout.

Some of the 22 stocks include Nvidia (NVDA), Microsoft (MSFT), Broadcom (AVGO), IBM (IBM), Jabil (JBL), Cardinal Health (CAH), Take Two (TTWO), Philip Morris (PM), Oracle (ORCL), Amphenol (APH), Netflix (NFLX), Royal Caribbean (RCL), JPMorgan (JPM), GE Vernova (GEV), and Howmet Aerospace (HWM).

In addition, 83 stocks in the S&P 500 are within 5% of their all-time highs, and 146 are within 10%.