Stocks rose on Wall Street on Friday following the government report. Employment growth rose slightly in AprilThis is a sign that persistently high interest rates may be starting to hit the world’s largest economy even harder.
The S&P 500 rose 1.3% in afternoon trading, putting it on track to erase this week’s losses. As of 2:55 p.m. ET, the Dow Jones Industrial Average was up 468 points, or 1.2%. The Nasdaq Composite rose 2.1%.
The nation’s employers added 175,000 jobs last month, down sharply from March’s massive gain of 315,000. This was significantly lower than the 233,000 increase expected by economists. Average hourly wages in April also did not increase as expected. The report suggests that the Fed’s aggressive streak of rate hikes may finally be slowing the pace of hiring.
“Slowing labor demand will ultimately ease inflationary pressures and give the Fed room to cut rates this year,” said Jeffrey Roach, chief economist at LPL Financial. “Slower employment growth and fewer hours worked suggest the economy is slowing at a steady pace. This jobs report is consistent with a soft landing story.”
U.S. bond yields in the bond market generally fell in response to the employment report. The yield on the 10-year U.S. Treasury, which financial institutions use as a guide to pricing mortgages, fell to 4.5% from 4.59% late Thursday. The yield on the two-year Treasury note, moving more in line with the Fed’s expectations, fell to 4.81% from 4.88%.
The US economy is in troubleIt is expected that the economy will remain strong enough not to fall into recession, but not strong enough to worsen the economy. Inflation has already stalled. This is essentially the “soft landing” the Fed wants to achieve to bring inflation down to its 2% target. Consumer-level inflation was 3.5% in March, well below the peak of 9.1% nearly two years ago.
This year’s stubbornly high inflation rate has helped Federal Reserve Chairman Jerome Powell speaks on Wednesday He said it was likely to take “more time than previously expected” to gain enough confidence in inflation to lower interest rates.
“Some of the data coming out of the jobs report weakens that story a little bit,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. “They want rates cut, but they need more confidence in the inflation numbers and today’s wages data should give them a little more confidence.”
The Fed’s key interest rate remains at its highest level since 2001, and a rate cut would relieve some pressure on the economy and financial markets.
The benchmark S&P 500 stock index fell 4.2% in April, its first monthly decline since October. Signs of high inflation caused traders to dial back their hopes for when the Fed would start cutting interest rates.
Since this year 6 or more predictions Traders are currently betting primarily on one or two rate cuts, if any, scheduled for 2024, according to CME Group data.
Technology stocks accounted for most of Friday’s gains. Apple soared 7.2% after announcing a massive $110 billion share buyback. The tech giant reported late Thursday. iPhone sales suffered the sharpest quarterly decline since the start of the pandemic.
Microsoft rose 2.1% and Nvidia rose 3.6%.
Several companies posted profits after reporting strong quarterly results.
Amgen rose 12.4% after the biotech company provided investors with an encouraging update on a potential obesity drug. Live Nation Entertainment rose 7.6% after the ticketing company and concert promoter beat analysts’ first-quarter revenue estimates.
Motorola Solutions rose 5% after the communications equipment maker raised its profit forecast for this year.
Booking Holdings rose 3.7% after first-quarter bookings and revenue beat expectations. Expedia Group, another online travel company, also performed poorly. Shares fell 14.6% after the company’s latest quarterly results beat Wall Street targets, but full-year booking outlook comes as the company’s Vrbo rental division is slow to recover from its move to Expedia’s platform. has been revised downward.
In Europe, Germany’s DAX rose 0.6%, Paris’ CAC40 index rose 0.5%, and London’s FTSE100 index rose 0.5%.
Markets in Tokyo and mainland China were closed for the holiday. The Japanese yen rose slightly against the dollar.
