US labor market unexpectedly good: Dow Jones starts the weekend with a record

US labor market unexpectedly good
Dow Jones starts the weekend with a record

The Dow and the S & P-500 bid farewell to the end of the week with record values. The US labor market is driving the development: There are many new jobs and a decent increase in wages on the books. If only it weren’t for the pandemic. It presses titles such as the travel booking portal Expedia.

Wall Street made new highs on Friday with small profits. A better than expected labor market report provided some support and set new records for the Dow Jones and the S&P 500.

the Dow Jones Index closed 0.4 percent higher at 35,209 points that S&P 500 rose by 0.2 percent. the Nasdaq composite on the other hand lost 0.4 percent. There were a total of 1922 (Thursday: 2169) course winners and 1398 (1175) losers. 125 (130) titles closed unchanged.

“The economy continues, but without overheating,” said one market participant. Another spoke of a “double-edged sword”. With the US monetary tightening debate in full swing, the report has become even more important than usual. Although the economic optimists got their money’s worth thanks to the positive data, there are now fears of rapid tightening of monetary policy.

The delta variant makes forecasting very difficult

The situation on the US labor market was better than expected in July – job growth was stronger than forecast, and the decline in unemployment and the increase in hourly wages were unexpectedly significant. “There has been a lot of speculation about the importance of today’s job market report with regard to the timing of a possible slowdown in bond purchases and the timing of a possible rate hike, be it early 2023 or late 2022,” said market analyst Michael Hewson at CMC Markets. However, he does not believe that the picture of future monetary policy will be any clearer based on the labor market data. Because the Fed officials have no idea what the US economy will look like in a month – let alone in a year.

Market participants referred to the great unknown corona pandemic. The spread of the delta variant makes it difficult to predict employment and economic development, according to retailers. “I have a feeling that the situation is quite unstable – the stock market could be hit by bad delta variant news, at least temporarily. But it would be a slump followed by a quick recovery,” warned Trevor Greetham of Royal London Asset Management’s fund manager Trevor Greetham.

Gold and bonds under pressure

With the good data, prices on the US bond market came under pressure – yields at the long end of the market rose significantly. The data suggest that US monetary policy will be tightened soon. This speculation, in turn, weighed on the gold price – the rising dollar and rising market interest rates also put pressure on it. Because rising interest rates let the luster of the precious metal fade. The dollar, on the other hand, benefited from the assumption of monetary policy tightening, the dollar index gained 0.6 percent – the euro fell to a weekly low.

The oil prices also rose with the data – but then came back again and then quoted more easily. The data suggest increasing demand in the United States. The rising dollar, however, depressed the price.

Reporting period creates more movement

Novavax 161.98

In addition to the labor market data, investors also had to process other business figures: The vaccine manufacturer reported Novavax over the course of the second quarter. The numbers faded into the background, however, because the company postponed the approval application for its Covid-19 vaccination with the responsible US agency FDA to the fourth quarter. Novavax slumped 19.6 percent.

Zynga fell by a good 18 percent. The provider of online games had been one of the beneficiaries of the pandemic and felt the lifting of the lockdown measures in the second quarter. As a result, Zynga was forced to lower its booking forecast, an important indicator of sales. Despite a disappointing outlook, the stock gained from Beyond Meat 1.7 percent. In the second quarter, the supplier of vegetable meat substitutes slipped deeper into the red due to higher costs.

Yelp
Yelp 39.15

Expedia (-7.9%) surprisingly significantly reduced the loss in the second quarter and also exceeded expectations in terms of sales. However, the operator of the travel booking portal of the same name warned that the spreading delta variant of the corona virus was creating uncertainty.

Meanwhile, the business figures of Virgin Galactic (+ 5.8%) added. The company also said it would double prices for space tourists to $ 450,000. News Corp (-0.5%) reported a jump in sales in the fourth fiscal quarter. The company, which also includes the Wall Street Journal, also reduced its loss. pay from Dropbox (+ 2%) and Gopro (+ 0.2%) were also well received. UPS increased by 1 percent. The parcel company has launched a new $ 5 billion share buyback program.

Plug power gave up 0.4 percent, the hydrogen fuel cell provider posted a big leap in revenue. Yelp shot up 5.2 percent. The evaluation portal surprised positively with the profit development.

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