Job data calms Wall Street
S&P 500 re-enters the bull market
06/08/2023 10:42 p.m
On Wednesday, the Bank of Canada caused a bad mood on Wall Street. A day later, job data calmed the situation: More initial jobless claims lower the likelihood of another rate hike. Technology stocks in particular will benefit.
Wall Street ended trading on Thursday with premiums. The next meeting of the US Federal Reserve in the coming week was still in view. There were potential new insights into this from initial jobless claims. Because their number was significantly higher than expected, which means that speculation about an interest rate pause gained some momentum again. This primarily drove the interest-sensitive technology stocks. For the shares of Amazon, inteland Nvidia it went up by up to 2.8 percent.
The Dow Jonesindex rose by 0.5 percent to 33,834 points. The S&P 500 rose 0.6 percent, re-entering a bull market. This is defined as an increase of more than 20 percent from the recent low. For the Nasdaq-Composite was up 1.0 percent.
Does the Fed surprise?
The day before, however, the Bank of Canada’s rate hike reminded investors that the Fed could also surprise. According to Deutsche Bank, the markets are currently pricing in a rate hike by the Fed next Wednesday with a probability of 35 percent after previously 19 percent. The probability of an interest rate break is now 68 percent after the weak labor market data, after 64 percent the day before. The uncertainty was also fueled by the fact that inflation data are due on Tuesday, which could still influence the Fed’s decision.
“The Bank of Canada’s decision to resume interest rate hikes after a two-session hiatus, and the Reserve Bank of Australia’s surprise 25 basis-point rate hike the previous day, have boosted hawkish global central banks and expectations for a Federal rate hike Reserve strengthened,” said Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank.
Bonds are turning positive – dollars with levies
The US Bonds turned positive after weekly US jobs data, which could allow the US Federal Reserve to pause interest rates. The previous day there had been strong yield premiums, supported by new monetary policy speculation following the Canadian central bank’s interest rate hike. The 10-year yield fell 8.2 basis points to 3.71 percent.
The dollar showed up with significant charges. The dollar index lost 0.7 percent. Participants referred to the increased expectations of an interest rate pause by the US Federal Reserve. The euro climbed to $1.0781.
For the oil prices it went down sharply in the meantime. It was triggered by reports that the United States and Iran may be on the verge of an interim nuclear deal. This would have eased the sanctions against Iran and allowed larger amounts of Iranian crude oil to reach the world market, which would have weighed on prices. Oil prices then recovered some of the losses over the course of the year. According to a report by the Reuters news agency, the White House has denied an imminent agreement. Brent and WTI were still down by up to 2.1 percent.
The gold price rose on heightened speculation that the Fed would pause interest rates and the weak dollar. The troy ounce rose 1.3 percent to $1,965.
Gamestop stock collapses – Tesla is growing strongly
The individual values fell game stop by 17.9 percent after the ailing video games retailer announced the firing of its CEO Matt Furlong in addition to presenting financial figures. His responsibilities will be assumed initially by board member Ryan Cohen, an activist investor and co-founder of online pet supplies retailer Chewy.
For the Teslashares were up 4.6 percent. According to a newspaper report, the US electric car manufacturer is considering building an electric car assembly plant near the Spanish city of Valencia. This is reported by the Spanish business newspaper Cinco Dias, citing unnamed sources. As part of this, Tesla could invest more than three billion euros in the region, where Ford already has a plant and the Volkswagen subsidiary Powerco is building a battery factory.
Semtech jumped 4.9 percent. The chipmaker surprisingly reported earnings for its fiscal first quarter on an adjusted basis.