Wall Street’s best week of the year is getting even better Friday following a cooler-than-expected report on the job market. The S&P 500 was 0.9% higher in early trading and on track to rise every day this week. The Dow Jones Industrial Average was up 182 points, or 0.5%, as of 9:45 a.m. Eastern time, and the Nasdaq composite was 0.9% higher.
Quick Read
- Wall Street experienced its best week of the year with gains on Friday after a favorable jobs report.
- The S&P 500 was up 0.9%, while the Dow Jones and Nasdaq rose 0.5% and 0.9%, respectively.
- This surge is due to hopes that the Federal Reserve may stop increasing interest rates, which were implemented to control inflation.
- The jobs report indicated that hiring slowed down, suggesting less inflationary pressure.
- Treasury yields fell, with the 10-year Treasury note dropping to 4.48%, signaling reduced economic pressure.
- The Federal Reserve aims for a cooler job market to prevent wage-driven inflation.
- Despite the slowdown in hiring, the Fed seeks more evidence before changing policies in December.
- Federal Reserve Chair Jerome Powell hinted that continued yield increase could avoid the need for rate hikes.
- Investors are relieved at the slowing job market, hoping the Fed will halt rate increases.
- Global markets are also influenced by the Fed, with U.S. data being a major market driver.
- Despite Apple’s stock drop after its revenue forecast for late 2023, market excitement persists.
- Expedia Group and Cardinal Health saw stock increases after reporting strong quarterly results.
- European and Asian market indices also reported gains.
The Associated Press has the story:
Wall Street’s best week of 2023 heads toward unblemished finish after job report
Newslooks- NEW YORK (AP)
Wall Street’s best week of the year is getting even better Friday following a cooler-than-expected report on the job market.
The S&P 500 was 0.9% higher in early trading and on track to rise every day this week. The Dow Jones Industrial Average was up 182 points, or 0.5%, as of 9:45 a.m. Eastern time, and the Nasdaq composite was 0.9% higher.
Stocks have surged more than 5% this week on rising hopes the Federal Reserve is finally done with its market-crunching hikes to interest rates, which were meant to get inflation under control. Friday’s jobs report underscored that pressure is easing on inflation after it showed employers hired fewer workers last month than economists expected.
Treasury yields in the bond market tumbled immediately after the jobs report, releasing more of the pressure that had built up on Wall Street. The yield on the 10-year Treasury eased to 4.48% from 4.67% late Thursday and from more than 5% last week, when it hit its highest level since 2007.
Before this week, Treasury yields had been rising rapidly and catching up to the Fed’s main interest rate, which is above 5.25% and at its highest level since 2001. Higher yields slow the economy, hurt prices for investments and raise the risk of something breaking within the financial system, such as the three high-profile U.S. bank failures that rattled financial markets during the spring.
The Fed put such pressure on the economy intentionally, hoping to starve inflation of its fuel. It wants the job market to cool, particularly the pay raises going to workers. The Fed fears that too-strong pay gains could create a vicious cycle that keeps inflation high.
Analysts said Friday’s jobs report offered encouraging signals for the Fed, with average hourly earnings rising less in October from September than expected, though it still doesn’t mean the job is done.
“Wages cooled and, even accounting for the impact of auto strikes, the pace of jobs being added appears to be cooling relative to the beginning of the year,” said Andrew Patterson, senior economist at Vanguard. “The Fed will want to see more evidence that this labor market cooling represents a trend before they make a decision on any policy changes in December.”
Of course, this week’s sharp fall in Treasury yields could also end up hurting stock investors in the long run. Fed Chair Jerome Powell said this week that the central bank may not need to hike rates if the recent rise in yields stays “persistent.” He pointed to how mortgage rates have climbed in concert with the 10-year Treasury yield, for example.
A swift regression in Treasury yields could make the Fed more nervous and encourage it to consider raising rates again. Plus, a slowing job market raises pressure on economic growth, and worries still exist on Wall Street about a possible recession even though the economic is strong at the moment.
Still, a slowing U.S. job market is exactly what investors wanted to see because it could convince the Fed to stop pumping the brakes harder on the economy and financial markets with more rate hikes. The yield on the two-year Treasury, which closely tracks expectations for the Fed, tumbled to 4.86% from 4.99% late Thursday.
Even for global investors, the “Fed matters more than other central banks,” and weak U.S. data is “the only game-changer for markets,” foreign-exchange strategists at Bank of America wrote in a BofA Global Research report.
Excitement about a potentially easier Fed was more than enough to offset a fall for Apple, which is Wall Street’s most influential stock.
The most valuable U.S. stock fell 1% despite reporting stronger profit for the latest quarter than analysts expected. Analysts said investors were likely disappointed with Apple’s forecast for revenue for the last three months of 2023.
On the winning side of Wall Street was Expedia Group, which reported stronger results for the latest quarter than expected. Its stock flew 15.9% higher.
Cardinal Health was also strong following its better-than-expected profit report, and it rose 5.8%.
Stocks indexes were also higher across most of Europe and Asia.
