US Stock Market Surges as Bad Earnings Turn into Good News: S&P 500 Rises Most in Two Months

US Stock Journal ｜ Bad earnings turn into good news, S&P 500 rises most in two months (Spencer Platt via Getty Images)

US stocks rose sharply, led by technology stocks. US employment data was unexpectedly worse than expected, and surveys pointed to a slowdown in service industry activity, which also fueled market expectations of an interest rate cut. The US Treasury bond yield fell to nearly 4.45% at one point, a drop of more than 12 basis points. The US dollar weakened, and the US dollar index fell to its lowest level reached three weeks ago when March CPI inflation data was released, and once fell to 152 against the yen . To summarize the week, all three major indexes recorded gains and continued to rise for two consecutive weeks.

Download Yahoo Finance App

Real-time quotes of US stocks and foreign currencies, multi-country news

Market conditions on May 3 (Friday)

l Dow Jones Index It rose 450.02 points or 1.18% to 38,675.68 points.

l S&P 500 It rose 63.59 points or 1.26% to 5,127.79 points.

l Nasdaq Index It rose 315.37 points or 1.99% to 16,156.33 points.

l New York oil futures for June It closed at $78.11 a barrel, down $0.84 or 1.1%.

l New York June gold futures It closed at $2,302.9 an ounce, down $54.8 or 2.3%.

l The interest rate on the 10-year US Treasury bond It closed at 4.500%, down 7.1 points.

Major technology stocks were boosted by falling interest rates.an appleThe decline in performance was lower than expected, and a large buyback plan was announced.Nvidiaand AMD has grown by more than 3%.MicrosoftandMeta Each rose 2%, while the S&P Information Technology sector rose 3%.

The performance of weight loss drug concept stocks was mixed.AmgenTrial of two weight loss drugs enters new phase, stock prices jump by double digits;Eli LillyIt continued to be under pressure after the results, falling 2.7%.

Data from the US Bureau of Labor Statistics showed that the US economy added 175,000 non-farm jobs in April this year, a sharp slowdown from the revised 315,000 jobs in March and below market expectations of 243,000 jobs. The unemployment rate rose to 3.9%, while the market expected it to remain unchanged at 3.8% last month. The number of unemployed people was 6.492 million, an increase of 63,000. In addition, average hourly wage growth slowed to 0.2%.

Following the release of the data, the market now expects the Federal Reserve to cut interest rates for the second time at the end of this year, according to FedWatch from the Chicago Stock Exchange, the possibility of a cut 0.25% interest rate in September nearby. to 50%.

The US service industry, which continues to drive the economy and even inflation, is also showing signs of slowing down.

According to a survey by the Institute for Supply Management (ISM), the US services purchasing managers’ index (PMI) unexpectedly fell to 49.4 in April this year, well below 51.4 last month, reflecting its ‘ first reduction in service industry activity from December 2022. . Growth in new orders (52.2) slowed and output (50.9) fell sharply, pushing companies to lay off workers at a faster pace (45.9), meaning the employment rate fell for the third time.

The latest PMI value from S&P Global, another research group, showed that business activity in the service industry continued to grow, but the rate of expansion slowed. The seasonally adjusted services PMI industrial activity index fell to 51.3 in April from 51.7 in March, falling for the third consecutive month, but higher than the initial value of 50.9.

Federal Reserve Governor Michelle Bowman said that inflation is expected to remain high for some time even if the Federal Reserve keeps interest rates unchanged at current levels, inflation should continue to decrease at the same time. the progress of inflation stops or gradually returns, She is willing to increase policy rates.

She also cited several factors that prevented the bureau from cutting interest rates, including a growing housing shortage among workers and continued strong wage growth.

ING Bank confirmed again that it expected interest rate cuts starting in September Data showed that the unemployed population is increasing.