U.S. stocks are drifting around their records Friday after a tough-to-parse jobs report appeared to bolster the case for easier interest rates later in the year. The S&P 500 was flat in midday trading, coming off a record close, and on track for its 17th winning week in the last 19. The Dow Jones Industrial Average was up 103 points, or 0.3%, and the Nasdaq composite was 0.1% lower.
Quick Read
- U.S. stocks showed mixed reactions following a complex jobs report, with the S&P 500 remaining stable, the Dow Jones rising slightly, and the Nasdaq experiencing a minor dip.
- The recent jobs data presented a mixed picture, indicating higher-than-expected employment growth but lower-than-anticipated wage increases, leading to varied interpretations regarding the Federal Reserve’s interest rate plans.
- Investors are hopeful for a cooling inflation that could prompt the Federal Reserve to reduce its main interest rate, currently at its highest since 2001, to alleviate economic pressures.
- The bond market saw a decrease in Treasury yields, reflecting increased expectations of a Fed rate cut possibly starting in June.
- Companies like Gap and Smith & Wesson Brands saw stock gains due to better-than-expected quarterly earnings, while Nvidia and Broadcom experienced declines despite Nvidia’s significant year-to-date rise.
- The global stock market experienced modest growth in most regions, with South Korea’s Kospi making notable gains.
The Associated Press has the story:
Wall Street hangs around its record high with hopes for easier interest rates
Newslooks- NEW YORK (AP) —
U.S. stocks are drifting around their records Friday after a tough-to-parse jobs report appeared to bolster the case for easier interest rates later in the year.
The S&P 500 was flat in midday trading, coming off a record close, and on track for its 17th winning week in the last 19. The Dow Jones Industrial Average was up 103 points, or 0.3%, and the Nasdaq composite was 0.1% lower.
Treasury yields eased in the bond market immediately after the release of a jobs report that economists called “all over the place.” It showed employers hired more workers last month than economists expected, but wages for workers rose by less than forecast. It also said job growth in January was not nearly as hot as earlier thought.
The job market and overall economy are in a delicate spot, where Wall Street wants them to continue growing, but not so much that it raises pressure on inflation.
The ultimate goal is for inflation to cool enough to convince the Federal Reserve to lower its main interest rate from its highest level since 2001. Such a move would release pressure on the financial system and the economy, which has so far remained out of a recession despite high interest rates.
“Big picture: these were helpful numbers for the Fed to gain confidence,” said Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management.
Following the report, bets built on Wall Street that the Fed will likely start cutting in June. The yield on the two-year Treasury, which follows expectations for the Fed, dipped to 4.47% from 4.51% late Thursday.
The yield on the 10-year Treasury, which also focuses on longer-term economic growth, likewise slumped immediately after the report, though it pared its drop later in the morning.
Wall Street loves lower interest rates because they encourage people and companies to borrow, which can strengthen the economy, and because they boost prices for stocks and other investments.
“Things are good, but not great, and they’re getting a touch worse,” Brian Jacobsen, chief economist at Annex Wealth Management, said about the jobs report. “The payroll gains are still fantastic, but we’re not as strong as we thought we were with the prior months’ numbers being revised down.”
Fed Chair Jerome Powell said a day earlier that the central bank is “not far” from cutting interest rates. It just needs additional data confirming that inflation is heading sustainably down to its 2% target.
In the meantime, the hope on Wall Street is that the remarkably resilient economy will drive growth in profits for companies.
Gap climbed 4.7% after the retailer reported stronger profit and revenue for the latest quarter than analysts expected. The retailer said an important sales trend returned to growth at both its Old Navy and Gap stores. The owner of Banana Republic and Athleta also gave a forecast for upcoming sales this year that was a touch higher than analysts’ estimates.
Gun maker Smith & Wesson Brands leaped 26.1% after likewise reporting stronger profit than expected for the latest quarter. It said its shipments grew faster than the overall firearm market.
Earlier in the day, Nvidia’s stock was once again leading the S&P 500 higher, as has become almost routine. But the index’s momentum let up later in the morning as Nvidia faded.
It’s a rare dip for the company, which has soared to become one of Wall Street’s most influential after more than tripling last year. It slipped 1.9% Friday, but it’s still up more than 80% so far this year.
Also on the losing end was Broadcom, which fell even though it reported stronger results than expected. It dropped 5.5% after giving a forecast for revenue this upcoming year that was a touch below analysts’ expectations.
Costco Wholesale sank 6.6% after its revenue for the latest quarter fell shy of forecasts.
In stock markets abroad, indexes rose modestly across much of Asia and Europe. South Korea was a standout as the Kospi jumped 1.2%.
