Stocks enjoy a pull from big tech and NFPs
The IT sector’s strong performance on Friday was led by Apple. An unexpectedly better monthly employment data helped calm investors’ fears of a deeper and darker downturn.
There was a 2% increase on the S&P 500, a 1.8% increase on the Dow Jones, and a 2.4% increase on the Nasdaq. Strong demand for Apple’s iPhone in developing countries helped propel the company’s stock price up by more than 3% after the company reported fiscal second quarter earnings above Wall Street projections.
Aside from Alphabet, other major equities such as Meta and Microsoft were also rising. The regional bank sector recovered some of the losses from the previous day, however some analysts say it’s still too soon to say the financial turbulence is resolved. This might have just been a correction.
Despite downward adjustments to the preceding jobs reports in March and February, the growth in nonfarm payrolls in April was 235,000, far more than the average estimate of 180,000 new jobs. Wage growth for the month of 0.5% above forecasts of 0.3%, while the jobless rate dropped by 0.1% to 3.4%.
Data for next week
Next week, on Wednesday and Thursday, respectively, the US Consumer Price Index (CPI) and the Producer Price Index (PPI) will be released. These figures are important because they will affect the future course of the greenback and rates on US Treasury bonds.
The yield on US 10-year bonds fell to a three-week low of 3.45% before recovering to finish at 3.45%, while the yield on US 2-year bonds fell below 4% before the close of trading. The bond yield is still around its recent average. However, continued uncertainty around the US debt ceiling might lead to more market volatility, even while the overall picture remains unfavorable.
US 10-year yield, source: CNBC
The US dollar does not like positive news
The US dollar Index hit a new low for the year on Friday, but it has managed to stay above the critical 101.00 level. Despite a rise in US rates and better market confidence, the USD/JPY recorded the biggest weekly drop since March. The pair recovered and moved closer to 135.00.
The EUR/USD didn’t move much over the course of the week following the ECB rate hike, which was widely anticipated. The pair almost reached 1.1100 but then retreated.
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GBP/USD finished the week at its highest point since April 2022. Monday, May 8th, is a holiday in the United Kingdom in honor of King Charles III’s coronation. It is widely anticipated that the BoE would increase rates by 25 bps on Thursday. The market will be watching to see if the BoE indicates a halt or leaves the door open to further rate increases. The UK’s GDP for the month will be released this coming Friday.
Oil was unable to break the losing streak
Oil prices climbed on Friday. They have now fallen for three consecutive weeks as investors worry that the US financial meltdown could slow down the economy and reduce fuel consumption.
With a final price of $75.30 per barrel, Brent crude was up $2.80, or 3.9%. The price of WTI rebounded $2.78, or 4.1%, to $71.34 after reaching a level not seen since late 2021.
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Gold dropped from the record high of roughly $2,075 towards $2,000 in response to the NFP data. The yellow metal experienced a tumultuous week with contradictory signals. Silver prices were higher for the majority of the week, but they fell on Friday by 1.70% to drop back below $26.00.