The Wall Street district of New York (GETTY IMAGES NORTH AMERICA/AFP/SPENCER PLATT)
The New York Stock Exchange opened higher on Friday, not frightened by a number of job creations much higher than expected in May in the United States, nuanced by the increase in unemployment, and reassured by the resolution of the crisis of the debt after a decisive vote in the Senate.
Around 1:55 p.m. GMT, the Dow Jones gained 1.19%, the Nasdaq index gained 0.67% and the broader S&P 500 index gained 0.88%.
The US economy added 339,000 jobs in May, nearly double the figure projected by economists (190,000).
The data was enough to tense Wall Street, because it could reflect the persistence of inflationary pressures, likely to encourage the American central bank (Fed) to continue its cycle of monetary tightening.
But the impression was tempered by the bigger-than-expected rise in the unemployment rate, to 3.7% from 3.4% in April, as well as the deceleration in the pace of average wage growth, to 0.3% over one month against 0.4% previously.
This latest information “will give the Fed room to keep its rates unchanged at its next meeting” on June 13 and 14, Rubeela Farooqi of High Frequency Economics said in a note.
“The reaction (to the report) has not been horrible,” said Karl Haeling of LBBW, in part because “the jump in unemployment was not expected.”
For Patrick O’Hare of Briefing.com, a wind of “optimism” is blowing through the market, seduced by the idea that “the economy can avoid a recession thanks to the persistent strength of its job market”.
The analyst also attributed the direction of the market to the vote in the Senate, Thursday evening, of the text suspending the debt ceiling, which definitively rules out a default of payment by the United States in the short term.
The good employment figure and the end of this political crisis, which kept investors in suspense for several weeks, caused tension on the bond market.
If it has now acted on a monetary status quo this month, the New York market is now counting on an increase in July and sees the Fed’s key rate above 5% at the end of 2023, i.e. its current level.
Moreover, to replenish its reserves after months of stringent management due to the debt deadlock, the US Treasury will proceed with massive bond issues, which Karl Haeling estimates at 600 billion dollars.
By flooding the market with Treasury bonds, it will lower their prices and have to offer more attractive conditions, hence the tension on rates.
On Friday, the yield on 2-year US government bonds stood at 4.43%, against 4.34% the day before closing.
On the side, Amazon (+2.01%) accelerated. The Bloomberg agency reported that the group would consider launching a mobile phone offer for its Prime subscribers, at low cost or even free.
Telephone operators took the news badly, AT&T (-3.89%), T-Mobile (-7.34%) or Verizon (-2.87%) picking up in the first exchanges.
The Canadian sports equipment manufacturer Lululemon (+ 13.71%), known for its high-end yoga pants, was off in a sprint after publishing, Thursday after the stock market, results that exceeded expectations and raised its annual forecasts. The group indicated that it had not seen a slowdown in demand, despite a deteriorating economic situation.
The semiconductor manufacturer Broadcom rose (+3.61%) after publishing results slightly above expectations. Chief executive Hock Tan has estimated that a quarter of the group’s revenue will come from so-called generative artificial intelligence next year.
The petrochemical groups DuPont de Nemours (+5.71%) and Chemours (+19.14%) advanced after the announcement on Friday of an amicable agreement with hundreds of local authorities who were claiming damages from them related to the contamination of their water with perfluoroalkyl and polyfluoroalkyl, also called PFAS, nicknamed “eternal” pollutants.
© 2023 AFP
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