Sherif Adel (Washington)
US stocks rose in trading on Friday after the non-farm payrolls report revived hopes that the Federal Reserve would reduce US interest rates soon, so that its three main indices jumped, and the Dow Jones Industrial Average added 450 points to its value at the beginning of today’s trading.
In the last trading days of the week, the points added to the most famous index in the world represented an increase of 1.18%, and the S&P 500 index, which most reflects the sectors of the American economy, rose by 1.26%, while gains in the Nasdaq index, which is full of technology companies, reached nearly 2%.
On the weekly level, the three indices were in the green zone, as the Dow Jones rose by 1.14%, and the Nasdaq by 1.43%, while the S&P only rose by 0.55%, despite the bad start of the week’s trading on Monday and Tuesday.
The non-farm payrolls report issued in Washington on Friday showed that US companies added 175,000 jobs in April, less than the 240,000 jobs expected by economists surveyed by Dow Jones.
The unemployment rate rose to 3.9% from 3.8% the previous month, according to the Bureau of Labor Statistics, and wage numbers were lower than expected, all signs of a decline in stubborn inflation in the world’s largest economy.
Emily Rowland, chief investment strategist at John Hancock Investment Management, said: This has already eased investors’ fears that the economy may be overheating or accelerating again, which revives hope for lower interest rates. That’s why interest rates fell, bonds rose, which drove stock markets higher. Bad news for the jobs market means the Fed may be able to start cutting rates as soon as this year.
After weaker-than-expected job growth in April and moderate wage gains, traders revised their expectations for the Federal Reserve’s decisions, to reflect two cuts of a total value of 0.50%, before the end of the year, according to the Federal Reserve Monitor tool of the Chicago Mercantile Exchange (CME). Markets currently expect an interest rate cut of 0.25% at the Federal Reserve meeting next September.
Interest rates also fell after the labor report, with the 10-year Treasury yield briefly falling below 4.5%, which contributed to a rise in shares of major technology companies, which are highly sensitive to interest rate expectations. The shares of Nvidia, the leader of the artificial intelligence boom, and the shares of AMD rose by more than 3%, and the shares of Microsoft and Meta Platforms rose by 2% each, while the information technology sector in the S&P index rose by 3%.
Strong business results from the core companies in the Dow Jones Industrial Average contributed to Friday’s rise, with Apple shares rising nearly 6% after it announced a $110 billion share buyback, and exceeded expectations in revenue and profits, during the ending quarter.
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