Dow Jones closes in positive territory
Weak US labor market gives share prices a boost
November 3rd, 2023, 10:20 p.m
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The numbers in the US labor market report for October are weaker than expected. The US monetary authorities are therefore becoming more cautious. Investors expect that the Fed will not tighten interest rates any further. And Wall Street is breathing a sigh of relief.
Wall Street showed up with premiums, building on the already significant price gains of the current week. The stock markets continued to be supported by sharply falling market interest rates in the wake of the labor market data. This was evident in the individual values Apple-Share with slight losses after the quarterly figures. The technology sector in S&P 500 lost 0.1 percent against the positive trend.
In recent days, significantly lower market interest rates have given the stock market a boost following warmly received statements from US Federal Reserve Chairman Jerome Powell. The market largely assumes that the Fed will not raise interest rates again in the current cycle, although the central bank has kept this option open.
Tailwind for this expectation came from the US jobs report for October. Because job growth was lower than economists expected. 150,000 jobs were created in the private sector and the government, while economists surveyed by Dow Jones Newswires had expected an increase of 170,000. On the one hand, this calls for caution with regard to the economy, and on the other hand, it is likely to have a dampening effect on inflation.
The Dow Jones Index increased by 0.7 percent to 34,061 points. For the S&P 500 it went up by 0.9 percent. The Nasdaq Composite gained 1.4 percent. On the Nyse there were 2,438 (Thursday: 2,583) price winners versus 468 (328) losers. 39 (44) titles closed unchanged.
Business activity in the US service industry was somewhat more lively in October than in the previous month. The purchasing managers’ index calculated by S&P Global for the sector rose to 50.6 from 50.1 points. However, economists had predicted a level of 50.9. The ISM service sector index fell from 53.6 in September to 51.8 in October. Economists had only forecast a decline to 53.0.
Yields fall significantly – dollar at five-week low
They gave on the bond market Returns According to the labor market data, it continued to fall sharply – by 14.1 basis points to 4.52 percent in the ten-year period. The bond market turnaround was sparked by views that the slowdown in the U.S. economy will put an end to Federal Reserve interest rate hikes and high inflation, it said. The 30-year yield posted its biggest weekly loss since March 2020.
With the US labor market report being slightly weaker than expected, the dollar fell to its lowest level in five weeks. Falling US bond yields again depressed the Dollar index by another 1.0 percent. The data supports the opinion that is already prevailing in the market that the interest rate peak in the USA has been reached and that no further interest rate increases are imminent.
The Gold price benefited from falling market interest rates and the weak dollar. The price per troy ounce rose by 0.4 percent to 1,993 dollars; for a short time it had already exceeded the 2,000 dollar mark. “Everything speaks in favor of gold,” said one market participant, referring to the moderate US jobs report, the declining ISM index and geopolitical risks.
Oil prices fell. The quotes from Brent and WTI lost 1.8 percent each. Prices marked the second straight weekly decline as fears of an escalation of the Israel-Hamas war eased and investors returned their focus to the demand outlook, it said. In addition, positions were reduced before the weekend.
Apple in the red due to declining sales
Apple decreased by 0.5 percent. The iPhone maker also reported a decline in sales for its fourth fiscal quarter, although sales were still higher than analysts expected. Business in China shrank surprisingly significantly. In China, Apple is likely to continue to struggle with the weak economy there and competition from Chinese suppliers, indicated Apple CFO Luca Maestri.
Expedia increased by 18.8 percent. The travel platform presented surprisingly good figures and reported continued high demand. The stocks of the hotel booking platform Booking Holdings improved by 0.7 percent after initial losses. Although the company reported a record quarter, the share price has already increased by over 40 percent since the beginning of the year.
Starbucks (+2.6%) wants to expand the number of its branches worldwide to 55,000 by 2030. The coffee chain currently operates a good 38,000. New business formats aimed at pickup and drive-thru are set to launch in the USA.