NEW YORK (dpa-AFX) – Before the weekend, US stock markets reacted surprisingly well to a surprisingly positive job market report and the prospect of further interest rate hikes. After the Dow Jones Industrial fell 1% in early trading, the major index even turned positive in the final hour of trading on Friday. Ultimately, this was 0.10% to 34,429.88 points, meaning the weekly balance is also slightly positive.
Released before the bell, the report painted a strong picture of the US labor market: Not only did jobs grow faster than expected in November, but wage growth more than doubled market expectations.
According to observers, this could put pressure on the US Federal Reserve to raise interest rates further to contain inflation. “The most concerning aspect of the jobs report has been the actual evolution of wages,” wrote Matt Peron, chief analyst at investment firm Janus Henderson. This is “a step backwards in an otherwise improving inflation story”. As a result, monetary policy is likely to remain tight for the foreseeable future, putting pressure on corporate profits.
Other major stock indexes also proved robust in the face of this unfavorable scenario for equities: the broad S&P 500 closed only moderately down 0.12% at 4071.70 points. Even the tech-heavy Nasdaq 100 fell just a touch 0.40% to 11,994.26 points.
A turbulent week in the stock market ended relatively quietly. By mid-week, the Dow had risen to its highest level since late April. Fed Chairman Jerome Powell sparked euphoria on stock markets with a statement that December key rates may not have risen as much as in previous months. “I still think the Fed is likely to hike rates more slowly since its December meeting,” QC Partners portfolio manager Thomas Altmann predicted. Rate hikes of this magnitude “could be with us longer than previously thought.”
Moving company news on prices was scarce ahead of the weekend. According to a Wall Street Journal report, United Airlines is close to ordering dozens of Boeing 787 Dreamliners. Boeing shares then moved to the top of the Dow with a four percent premium.
Marvell Technology shares fell 1.5%. The semiconductor maker presented disappointing sales and earnings data for the recent quarter. The outlook was also lower than expected.
Shares of food delivery company Doordash fell 3.4% after bank RBC removed a buy rating for the stock. Its analyst Brad Erickson pointed out that competitor Uber is doing better in New York’s most important Manhattan market.
Cards from cloud specialist Zscaler are down nearly 11%. A disappointing business outlook has had a negative impact here. On the other hand, automation software developer Uipath beat expectations with its interim report, which sent the shares up more than twelve percent.
In New York currency trading, the euro was initially under pressure after the labor market report, but has recovered losses and recently cost US $1.0533. The European Central Bank had previously set its key rate at $1.0538. The dollar had therefore cost 0.9489 euros.
US Treasuries were also unaffected by the prospect of interest rate hikes in the latter stages of trading. After initial losses, the 10-year bond futures contract (T-Note Future) closed up 0.18% to 114.50 points. The return over the ten year period was 3.48%./bek/jha/
— By Benjamin Krieger, dpa-AFX —
