(CercleFinance.com) – The New York Stock Exchange rose on Friday in the wake of economic statistics which revived expectations of an upcoming rate cut.
At the end of the morning, the Dow Jones index advanced 0.9% to 38,581.3 points, while the Nasdaq Composite gained more than 0.9% to 16,143.8 points.
The indicators published in the morning turned out to be much weaker than expected, which could push the Federal Reserve to put in place measures to support activity.
According to the Department of Labor, the American economy generated only 175,000 non-farm jobs in April, a number well below market expectations which averaged around 250,000.
‘These data should calm concerns surrounding a possible overheating of inflation and the scenario of a possible rate hike by the Fed’, underline the Commerzbank teams.
Another disappointment, activity in the services sector plunged back into contraction zone in April, a first since the end of 2022, according to the results of the monthly survey from the Institute for Supply Management (ISM).
After 15 consecutive months of growth, the ISM index measuring the evolution of the tertiary sector fell to 49.4 last month, falling below the threshold of 50 points reflecting a decline in activity, compared to 51.4 in March.
Investors have inferred that these worrying statistics could push the Fed to cut interest rates sooner than expected, perhaps as early as September.
On the bond market, the yield on ten-year Treasuries fell sharply again after the publication of employment figures, to nearly 4.48%, while the dollar weakened against the euro, the single currency rebounding beyond 1.0790.
The Dollar is clearly weakened with a decline of -0.4%, the Euro progressing symmetrically towards $1.0765.
The equity markets – and particularly the technology compartments – are also benefiting from the solid results of Apple, which reported yesterday evening ‘record’ EPS for a quarter ended in March.
The stock – which at yesterday’s close was down 10% since the start of the year – gained almost 7% and marked the second largest increase in the Dow Jones index.
‘Betting against the Cupertino group when it is about to enter an AI ‘supercycle’ and launches a $110 billion share buyback program is not a good choice for investors at a time when Apple is preparing to return to growth,’ estimate analysts at Wedbush Securities.
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