Wall Street started the day with a significant surge, recovering from its losses earlier in the week, following a report showing a slowdown in hiring by the government last month. This development was seen as a positive indication that the Federal Reserve’s efforts to combat inflation through high interest rates might be yielding results. The S&P 500 climbed by 1% in early trading on Friday, with the Dow Jones Industrial Average adding 445 points and the Nasdaq composite rising by 1.7%. The report revealed that U.S. employers added 175,000 jobs in April, a notable decline from the substantial increase seen in March. Apple also saw a surge of nearly 7% after announcing a massive $110 billion stock buyback.
The surge on Wall Street today comes as a significant report indicates modest job growth in April. This suggests that the consistently high interest rates may be starting to have a more pronounced effect on the world’s largest economy.
Futures for the S&P 500 and the Dow Jones Industrial Average showed gains of 1.2% and 1.4% respectively before the opening bell.
The addition of 175,000 jobs in April marks a sharp decline from the previous month’s blockbuster increase of 315,000 jobs and falls short of economists’ predictions of a 233,000 gain. This slowdown in hiring suggests that the Federal Reserve’s series of rate hikes may finally be impacting the pace of job creation.
The yield on the 10-year Treasury also saw a decrease, falling to 4.48% from 4.58% late Thursday.
The U.S. economy finds itself in a delicate balance, where it is hoped that it remains strong enough to avoid a recession while not exacerbating the already stalled progress on inflation.
Despite the economic challenges, Apple saw a significant increase of 6% following its announcement of a dividend raise and a $110 billion share buyback, despite posting the steepest quarterly decline in iPhone sales since the beginning of the pandemic.
Expedia, on the other hand, experienced a decline of 12.2% after beating Wall Street targets but revising down its full-year bookings guidance due to slow recovery of its Vrbo rental unit.
In Europe, gains were observed with Germany’s DAX up by 0.4%, while the CAC 40 in Paris and London’s FTSE 100 each gained 0.5%.
Japanese and mainland Chinese markets were closed for holidays.
The yen strengthened slightly against the U.S. dollar amid reports of heavy central bank intervention to curb the dollar’s rise.
The weakening yen has led to increased prices for imported goods, prompting the Bank of Japan to abandon its negative interest rate policy and raise its benchmark rate. There are indications that the bank may raise rates further, even if its 2% target is not met.
While a weaker yen benefits Japanese companies with overseas revenues, significant fluctuations in the foreign exchange market can disrupt corporate planning, and a sharp depreciation of the yen also increases costs for imports of essential commodities.
In Asian trading, Hong Kong’s Hang Seng surged by 1.5% to 18,475.92, following gains on Wall Street. Fresh initiatives by Chinese leaders to stimulate the economy also contributed to the buying of technology shares.
E-commerce giants Alibaba and JD.com saw increases of 4.1% and 5.5% respectively, while Baidu advanced by 4.4%.
Australia’s S&P/ASX 200 gained 0.6%, while the Kospi in Seoul slipped by 0.3%. Taiwan’s Taiex increased by 0.5%.
India’s Sensex experienced a decline of 0.9% to 73,952.37.
On Thursday, the S&P 500 rose by 0.9%, significantly reducing its losses for the week, following the Federal Reserve’s announcement that it is likely delaying interest rate cuts but not planning to hike them. The Dow increased by 0.9%, and the Nasdaq composite jumped by 1.5%.
In energy trading, U.S. benchmark crude oil gained 35 cents to $79.30 per barrel on the New York Mercantile Exchange, after experiencing a 5 cent loss on Thursday. Brent crude, the international standard, increased by 43 cents to $84.10 per barrel.
Featured Image: Unsplash
