A blockbuster U.S. jobs number fails to put a smile on Wall Street
Wall Street's main indexes slammed on the brakes Friday after a surprisingly stunning jobs report fuelled renewed concerns that the U.S. Federal Reserve may remain aggressive in its path of interest rate hikes even though inflation has been steadily cooling.
As the finishing bell rang on the New York Stock Exchange (NYSE), the blue-chip Dow Jones Industrial Average registered a -127.93-point loss, or -0.4%, to 33,926.01.
The broad-based Standard & Poor’s 500 Index fell -43.28 points, or -1%, to 4,136.48, while the rich-tech Nasdaq Composite Index dropped -193.86 points, or -1.6%, to 12,006.95 as growth stocks weigh on the markets.
The Nasdaq has been a star performer this week after gaining +15% over the past five weeks, posting its best stretch since May 2020.
Meta Platforms jumped +23% this week, while Tesla shares gained +6.8%.
The blockbuster U.S. jobs report Friday triggered much panic on Wall Street as investors try to recalibrate the expectations on how long the U.S. Federal Reserve’s hawkish path will need to continue in its quest to fight high inflation.
The U.S. economy added 517,000 new jobs in January, blowing out the 193,000 market estimates, while the unemployment rate hit a 53-1/2-year low of 3.4%, according to the U.S. Labour Department.
It is assessed that the aggressive bout of rate rises from U.S. Fed in 40 years will likely continue towards the benchmark rate above 5% so that it can continue to squeeze high inflation out of an economy.
In another sign of economic strength, U.S. services industry activity rebounded strongly in January.
Besides the U.S. jobs numbers, investors were also digesting another heavy batch of corporate results.
Shares of Apple, the largest U.S. company by market value, gained +2.44%, while Amazon dropped -8.4% after the company said operating profit could fall to zero in the current quarter as savings from layoffs do not make up for the financial impact of consumers and cloud customers clamping down on spending.
Alphabet shares slid -2.7% after the Google parent posted fourth-quarter profit and sales short of Wall Street expectations, while Ford Motor shares dropped -7.61% after the automaker predicted a difficult year ahead.
On Wednesday, U.S. Federal Reserve Chairman Jerome Powell reiterated that the central bank wouldn’t be cutting interest rates any time soon, even though many investors have been holding to his comments on “disinflation.”
Meanwhile, in the U.S. government bond markets, the yield on the 10-year Treasury, which helps set rates for mortgages and other economy-dictating loans, rose +3.531% from Thursday’s 3.396%, while the two-year yield, which tends to reflect the market expectations of future moves by the Fed, advanced 4.303%.
Bitcoin peaked at a fresh 5-1/2 month high at US$24,207.20 last week before sharply reversing and last at US$23,302.80, while Ethereum slipped away from the 4-1/5 peak at US$1,710.24 and last at US$1,653.86.
In Commodities, precious metals plummeted nearly -3%, with gold erasing intraday highs of $1,918 per ounce, to $1,861, while silver dropped to $22.33.
In energy markets, oil prices remained on the bearish path, with the global benchmark Brent crude trading at $79.84 per barrel, while U.S. benchmark West Texas Intermediate crude was around $73.20.
On foreign exchange markets, the US Dollar Index (US DXY), which measures the greenback against six counterparts, surged after the US jobs number to 102.80, while the Eurodollar dropped 1.0794, the British pound fell to 1.2048, the Japanese yen finished at 131.16, and the Australian dollar buying 0.6920 cents against the greenback.
We now put the crystal ball back in its padded box until next week, when Monday kicks off our “Weekly Predictions”.
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