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Hiring worse than expected in June amid elevated inflation

HR recruitment manager holding resume in hands while having an interview in a modern office. (Xavier Lorenzo/Getty Images)

(NEW YORK) — Hiring slowed markedly in June, falling short of economists’ expectations and displaying a wobbly labor market amid elevated inflation set off by the Iran war.

The U.S. added 57,000 jobs in June, according to the federal government’s monthly jobs report, which marked a decline from 172,000 jobs added in May.

The sluggish pace recorded in June departs from strong performance for the labor market so far in 2026. Employers added a robust average of about 114,000 jobs each month from January to May, Bureau of Labor Statistics (BLS) data showed.

The unemployment rate fell slightly from 4.3% in May to 4.2% in June, the BLS said. Unemployment remains low by historical standards.

The professional and business services sector led job gains, adding 36,000 positions in June. Significant job gains also came in healthcare, though the pace of job growth slowed in that sector.

Hiring had proven unexpectedly resilient, despite a rise in costs borne by businesses and shoppers.

The Middle East conflict, which began on Feb. 28, prompted the Iranian closure of the Strait of Hormuz, a maritime trading route that facilitates the transport of about one-fifth of the global oil supply. The standoff triggered one of the largest oil shocks ever recorded.

The pace of annual inflation stands at 4.2%, clocking in at more than twice the Federal Reserve’s target rate of 2%.

The combination of elevated inflation and a resilient labor market has raised the chances of an interest rate hike, futures markets show, posing a risk for corporations eager to keep borrowing costs relatively low.

Federal Reserve Chair Kevin Warsh briefly sent stocks tumbling this month during his first press conference atop the central bank. Warsh voiced a commitment to bringing inflation down to the Fed’s desired level.

“Persistently high prices are a burden for the American people,” Warsh told reporters in Washington, D.C. “This committee will deliver price stability.”

Futures markets peg the odds of an interest rate hike in September at about 64%, according to the CME Group’s FedWatch Tool, a measure of investor sentiment.

To be sure, the path forward for interest rates remains highly uncertain. Oil and gasoline prices have eased in recent weeks in response to negotiations between the U.S. and Iran, offering hope of a cooldown of inflation in the absence of rate increases.

On Wednesday, Warsh weighed in on the bullish side of an ongoing debate among policymakers, investors and the general public about the potential impact of AI on the labor market and wider economy.

The technology could create jobs and boost productivity, strengthening the economy of the U.S. and other nations, according to Warsh.

“This is a big paradigm shift both for the conduct of our policy and for our economies,” Warsh said. “I think the jobs will be greater. Prosperity will be stronger.”

Copyright © 2026, ABC Audio. All rights reserved.

How the spike in global bond yields creates more risk for the stock market

By CNN
New York (CNN) — Never doubt the power of the $30 trillion US Treasury market. It was robust enough to push back on the Treasury Department’s recent intervention while captivating Wall Street. Now investors are wondering whether the bond market’s unease is strong enough to disturb a booming stock market.Bond yields have climbed this year, driven by concerns about government deficits and an increase in supply of corporate bonds to fund the AI buildout. Investors are demanding more compensation to continue funding government spending and companies’ plans for AI.A rise in yields pushes up interest rates across the economy, raising borrowing costs for consumers and the government alike. It matters for stocks, too: Higher yields can affect calculations for companies’ future earnings and stocks’ value. Higher yields on trustworthy government bonds can also draw investors away from riskier assets like stocks.A “disorderly rise in bond yields” is the second biggest risk for stocks after the AI bubble, according to a survey of fund managers conducted by Bank of America this month.Investors are increasingly nervous about the stock market’s over-concentration in artificial intelligence. And a sharp, sustained rise in yields is another risk that could help deflate a bubble.Bond yields are not certain to derail stocks, but it creates a more complicated outlook. After global bond yields hit multi-year highs last week, the S&P 500 ended the week lower and snapped a three-week winning streak.Yields dropped at the start of this week, giving a boost to stocks. But the 30-year yield remains near its highest level in almost two decades. The 10-year US Treasury yield is trading close to its highest level in over a year.Ultimately, the impact on stocks depends on just how fast yields rise, how far they rise and why they are rising.Why stocks are resilientThe S&P 500 is up about 12% this year, on course for its fourth straight year of double-digit gains. Stocks rebounded from an Iran war-related slump in March before clinching a series of all-time highs, putting it at 27 record highs so far this year.Strong corporate earnings, waves of enthusiasm about artificial intelligence and a buy-the-dip mentality led by retail investors contributed to the market’s resilience.Stocks dropped last week as global bond yields hit multi-year highs, but the S&P 500 remains close to all-time highs – down less than 2% since its last record high two weeks ago. The tech-heavy Nasdaq Composite is down less than 4% since its last record high in early June.A strong corporate earnings season has helped keep the stock market afloat. There’s been some volatility for individual stocks, but overall, it’s been another quarter of stellar earnings.The earnings growth rate for companies in the S&P 500 is set be the strongest since 2021, according to FactSet data. The rise in bond yields hasn’t been sharp enough to shake stocks while earnings roll in.Since hitting a record high on August 13, the S&P 500 hasn’t had an up or down of more than 1% on a given day. Wall Street’s fear gauge, the VIX, is trading at 15, well below the 20-point threshold that signals volatility in markets.“We are cautious that the low level of volatility is luring market participants into a false sense of security,” Melissa Brown, global head of investment decision research at SimCorp, told CNN.Why yields could pose trouble for stocksYields matter for investors’ assessment of stocks’ value. A sharp rise in yields or intense volatility in the bond market can irk the stock market. When President Donald Trump announced sweeping tariffs in April 2025, the 10-year yield spiked and the S&P 500 dropped more than 10% in two days.What’s different this time? Bond yields have steadily climbed across the year. Stocks are near record highs. The steady rise in yields may be limiting the impact on stocks, analysts say, but a sustained push higher or bouts of volatility could begin to create more issues for investors.The key threshold is 5% for the 10-year yield, which would be the highest level since October 2023. That’s the psychological “line in the sand” when things become more worrying for stock market investors, said Sam Stovall, chief investment strategist at CFRA Research.“The real question is how long will interest rates be rising, and how far will they go?” Stovall said.The-CNN-Wire™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
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