Despite strong job data
Interest rate fears on US stock markets are easing
October 6, 2023, 10:58 p.m
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An unexpectedly strong US labor market report does not have a lasting impact on the New York stock exchanges. After a weaker start, the indices rose significantly. Only the food industry has to give up because the weight-loss injection curbs consumers’ appetite.
Despite initial interest rate concerns following the US government’s labor market report, Wall Street quickly turned positive. The Dow Jones Index the standard values closed 0.9 percent higher in the evening at 33,407 points. The technology-heavy one Nasdaq advanced 1.6 percent to 13,431 points. The broad one S&P 500 gained 1.2 percent to 4308 points.
Investors were focused on slowing wage growth, analysts said. Rising wages can contribute to increased inflation as companies use increased wages to justify price increases. Average hourly wages increased by 4.2 percent in September compared to the previous year. Experts surveyed by Reuters had an increase of 4.3 percent on their radar. “This should be a consolation for central bankers,” wrote experts at investment bank TD Securities. Meanwhile, job growth remained twice as strong as expected, with 336,000 new non-U.S. agricultural jobs. Shortly after publication, this fueled fears of further monetary policy tightening by the US Federal Reserve. Since the beginning of 2022, the monetary authorities have increased their key interest rate from close to zero to a range of 5.25 to 5.50 percent in order to curb high inflation and cool the labor market.
Waiting for inflation data
Investors were now waiting for the data on the development of US consumer prices planned for Thursday. “The policymakers’ next steps will really depend on these additional numbers. They will be happy to see inflation be modest with such job growth,” said Paul Nolte, senior wealth advisor and market strategist at Murphy & Sylvest Wealth Management.
The hope that the data situation would allow the US Federal Reserve to cut interest rates again gave the US currency some hope. The dollar index reduced its previous gains and was slightly in the red at 106.05 points. The euro gained 0.3 percent to $1.0582. However, the sell-off continued for ten-year US bonds. In return for the falling price, its yield rose to 4.776 percent.
The prices for North Sea oil Brent and US oil WTI rose by almost half a percent each to $84.45 and $82.52 per barrel (159 liters), respectively. According to analysts, this was more of a stabilization after the recent nosedive than a reversal. “Given the current very high oil price and the risk of a weakening in demand, the markets are preparing for the largest producers to phase out production cuts in a few months,” said Craig Erlam, analyst at Oanda trading house.
Weight loss injection affects the food industry
In terms of individual stocks, a boom in appetite suppressant preparations depressed the shares of confectionery manufacturers. The titles of the food manufacturers Mondelez and Kraft Heinz as well as the fast food restaurant chain MC Donalds fell by up to almost three percent. Analysts pointed to a comment from Walmart. Its boss John Furner told “Bloomberg” that he had observed a slight decline in demand for food since the market launch of the appetite-suppressing Wegovy injection from the pharmaceutical company Novo Nordisk.
The shares of Walmart and his competitor Costco lost around two percent each on Wall Street. Other individual values flew Levi Strauss from the depots. The jeans producer’s stocks fell by almost one percent. The company expects sales growth of up to one percent for the financial year only. Previously it was assumed to be 1.5 to 2.5 percent. The reason was the unusually warm weather at this time of year and consumers’ savings behavior in view of the struggling economy, it was said.