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Briefing.com Summary:

*Nonfarm payrolls increased by an impressive 172,000 in May, but the report overall had some economic blemishes.

*Tech stocks have come under renewed selling pressure.

*lululemon athletica is down 12% after providing disappointing guidance.

There is some noticeable weakness in the Nasdaq 100 futures this morning. We cannot say for certain, but there is likely some foaming at the mouth within the buy-the-dip crowd that has feasted on these kinds of indications. Yesterday was no exception.

The Nasdaq 100 declined as much as 1.6% yesterday and nearly made it back to unchanged before finishing with a modest 0.5% loss. The Philadelphia Semiconductor Index dropped as much as 6.3% but whittled that loss down to 2.2% by the closing bell.

It will be interesting to see if the same buy-the-dip impulse is there today, with Israel and Hezbollah taking leave of a ceasefire option, lululemon athletica (LULU) down 12% after disappointing with its guidance, South Korea's KOSPI falling 5.5% on tech weakness driven by concerns of concentration risk, and interest rates headed higher in the wake of a May employment report that surprised with stronger-than expected nonfarm payrolls. 

Currently, the S&P 500 futures are down 50 points and are trading 0.6% below fair value, the Nasdaq 100 futures are down 422 points and are trading 1.3% below fair value, and the Dow Jones Industrial Average futures are up 38 points and are trading 0.1% above fair value.

These indications were cemented mostly before the employment report, but notably, they didn't improve after the employment report, which, on the surface, triggered a sigh of relief.

Nonfarm payrolls surged by 172,000, aided by a 52,000 increase in government jobs; the unemployment rate held steady at 4.3%, along with the labor force participation rate (61.8%), and average hourly earnings increased 0.3% month-over-month.

The key takeaway from the report is that it is manna for headline writers but still lacks some important sustenance to suggest it is a marker of an economy running on a full stomach. To wit: real average hourly earnings on a year-over-year basis are down 0.4%; there were job losses in the retail trade (-1,100), information (-2,000), and financial (-22,000) industries; and the percentage of unemployed workers for 27 weeks or more increased to 27.5% from 25.3%, which we will assume speaks to the difficulty of finding a new job with comparable compensation to the prior one.

The 2-yr note yield is up 12 basis points to 4.15% as rate cut hopes get pushed further out, and the 10-yr note yield is up six basis points to 4.54%.

Notable headlines from the May Employment Situation Report:

• May nonfarm payrolls increased by 172,000 (Briefing.com consensus: 96,000). The 3-month average for total nonfarm payrolls increased to 188,000 from 79,000. April nonfarm payrolls revised to 179,000 from 115,000. March nonfarm payrolls revised to 214,000 from 185,000.

• May private sector payrolls increased by 120,000 (Briefing.com consensus: 89,000). April private sector payrolls revised to 177,000 from 123,000. March private sector payrolls revised to 202,000 from 190,000.

• May unemployment rate was 4.3% (Briefing.com consensus: 4.3%) versus 4.3% in April. Persons unemployed for 27 weeks or more accounted for 27.5% of the unemployed versus 25.3% in April. The U6 unemployment rate, which accounts for unemployed and underemployed workers, decreased to 8.1% from 8.2% in April.

• May average hourly earnings were up 0.3% (Briefing.com consensus: 0.3%) on the heels of a 0.2% increase in April. Over the last 12 months, average hourly earnings have risen 3.4% versus 3.6% for the 12 months ending in April.

• The average workweek in May was 34.3 hours (Briefing.com consensus: 34.3) versus 34.3 hours in April. The manufacturing workweek was unchanged at 40.4 hours. Factory overtime edged up to 3.1 hours.

• The labor force participation rate held steady at 61.8%.

• The employment-population ratio increased to 59.2% from 59.1% in April.

--Patrick J. O'Hare, Briefing.com