After a shockingly negative report on the nation’s job market, stocks are surging to new highs on Wall Street Friday, as investors see it as a boon to keeping interest rates down.
NEW YORK (AP) — The U.S. After a shockingly negative report on the nation’s job market, stocks are surging to new highs on Wall Street Friday, as investors see it as a boon to keeping interest rates down.
In morning trade, the S & amp; P 500 gained 0.7 percent to 4,232. If it maintains its current position, it will break the previous record of 4,211.47 set at the end of last month. As of 10:40 a.m. Eastern time, the Dow Jones Industrial Average was up 140 points, or 0.4 percent, at 34,689, while the Nasdaq composite was up 1.3 percent.
Up and down the scale of voices Wall Street admitted that Friday’s employment report was a major letdown. It’s normally the most awaited economic data of the month, and it revealed that employers added just 266,000 workers in April. This was significantly less than the 975,000 jobs predicted by economists and a significant slowdown from the 770,000 jobs added in March.
The poor report jolted the bond market, sending yields soaring. The 10-year Treasury yield briefly fell below 1.49 percent, approaching its lowest level in two months, before returning to 1.56 percent late Thursday.
Many analysts have stated that they do not want to place too much focus on a single month of discouraging results. They continue to expect the economy to improve significantly as coronavirus vaccines become available. The poor employment report also strengthens the case for the Federal Reserve to keep interest rates low in the hope of stimulating the labor market.
Low-interest rates have been a major explanation for the stock market’s meteoric rise since its pandemic low in March 2020. One of the market’s main concerns in recent months has been that a supercharged economy would lead to higher, longer-term inflation, forcing the Federal Reserve to scale back its policies. The central bank has held short-term interest rates at a record low while purchasing $120 billion in bonds per month.
Following the jobs report’s release on Friday morning, investors reduced their bets that the Federal Reserve would lift interest rates soon. According to CME Group, there is now just a 7% risk of a rise in the federal funds rate by the end of the year, down from a 15% chance only a month earlier.
Stocks that have gained the most from low-interest rates, such as high-growth technology firms, helped lead the market on Friday. Microsoft gained 1.4 percent, and Nvidia gained 2.9 percent, while the technology sector accounted for more than 40% of the S & amp; P 500’s morning increase.
Strong earnings results have contributed to the market’s rise, as companies continued to post record growth in the first three months of the year.
Expedia gained 8.7 percent, the most in the S & amp; P 500, after posting a first-quarter loss that was less than Wall Street anticipated and higher sales than expected.
Banks and other firms suffered losses as a result of the decline in Treasury yields. Wells Fargo dropped 1.2 percent, while the S & amp; P 500’s financial stocks fell 0.2 percent. Long-term interest rates are falling, limiting the profits banks can make from lending.
The 10-year Treasury yield recovered from its initial drop following the jobs report’s release, and it was 1.54 percent in morning trading.
Although the sharp slowdown in hiring alleviated inflationary concerns, one indicator in the employment report showed that salaries grew faster than economists predicted last month.
In European stock markets, the CAC 40 in France gained 0.2 percent, while the DAX in Germany gained 1.1 percent. The FTSE 100 in London increased by 0.7 percent.
In Asia, Shanghai stocks dropped 0.7 percent, while Hong Kong’s Hang Seng fell 0.1 percent.
China’s trade with the US and the rest of the world increased by double digits in April as consumer demand recovered, but growth appeared to be slowing.
The Nikkei 225 in Japan recovered from early losses to gain nearly 0.1 percent, while the Kospi in South Korea gained 0.6 percent.
Japan has agreed to expand its state of emergency to combat the spread of COVID-19 infections, which began in some urban areas last month, with people being urged to stay at home and restaurants closing early. According to officials, the emergency would last until the end of the month rather than ending on May 11.
Concerns are growing that Japan’s medical system is being overburdened, limiting its ability to provide vaccines and treat an increasing number of infections. So far, approximately 2% of Japan’s 126 million population has been immunized. Opposition to the Tokyo Olympics, which are scheduled to begin in July, is increasing, as are concerns about the government’s ability to fulfill its pledge to have the elderly vaccinated by then.
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