Wall Street shakes off interest rate concerns

(ABM FN-Dow Jones) US stock markets ended higher on Friday, but fell on a weekly basis. This was the worst week of the year for the Dow Jones, losing more than 2%.

The S&P 500 entered the weekend with a 1.1 percent gain on Friday at 5,204.34 points, the Dow Jones rose 0.8 percent to 38,904.04 points and the Nasdaq closed up 1.2 percent at 16,248.52 points.

While Wall Street succumbed to interest rate concerns on Thursday, indexes in New York managed to rise on Friday, despite a strong US jobs report and higher interest rates.

Several Federal Reserve directors, including Chairman Jerome Powell, made clear last week that they are in no rush to cut interest rates. One policymaker, Neel Kashkari, even suggested that there is a possibility that interest rates will not fall at all this year if inflation remains stubborn.

But ING investment director Simon Wiersma stressed that “Kashkari has no voice in the Fed’s policy meetings this year.”

However, Friday's important US jobs report appears to justify the Fed's hawkish tone. In March, 303,000 jobs were added, compared to 200,000 jobs expected and after job growth of 270,000 jobs in February.

The unemployment rate and wage growth are expected to be 3.8 percent and 4.1 percent, respectively. The latest figure may have satisfied investors, because wage growth in February was 4.3% year-on-year.

Nomura analysts said the jobs report proves that the Fed's current policy is not seriously slowing US economic growth.

“Strong labor data is unlikely to prevent interest rate cuts, but officials can patiently begin an easing cycle,” the BoJ said.

CME's FedWatch Current Tool showed on Friday that the chance of a June interest rate cut after the US jobs report fell to just over 50%, from more than 60% previously. The yield on ten-year bonds in the United States rose to 4.40 percent, the highest level since November last year.

US consumer credit rose less quickly in February than the previous month. The Federal Reserve announced this on Friday evening. Consumer credit rose $14.1 billion in February, after a $17.7 billion increase in January.

New inflation figures from the US await us next week, and the first US financial data will also kick off earnings season. Analysts expect JPMorgan Chase to report higher first-quarter profits, while Citigroup and Wells Fargo are said to have declined. CMC analysts are particularly curious about the outlook for heavyweight bank JPMorgan.

The euro/dollar was trading at 1.0835 on Friday evening. Oil prices rose further in the run-up to the weekend. With a settlement of $86.91 on Friday, a barrel of WTI crude oil became 0.4 percent more expensive on a daily basis. The price of a barrel of Brent also rose slightly.

On a weekly basis, oil prices rose by more than 4 percent due to ongoing tensions in the Middle East and fears of a broader conflict involving Iran. Meanwhile, tight global inventories and signs of strong demand are also contributing to the rally.

There is speculation about a possible attack by Iran on Israeli territory and that would be a “clear escalation of the proxy war between Iran and Israel,” according to market analyst Phil Flynn of Price Futures Group.

Company news

Tesla has canceled its plans to produce a cheap electric car as competition from China intensifies. Reuters news agency reported this on Friday based on internal messages from the American automaker. The sources said that Tesla will continue to develop self-driving taxis on the same small vehicle platform.

Tesla's cheapest model, the Model 3 sedan, costs about $39,000 in the United States. The now-discontinued entry-level model, sometimes described as the Model 2, will start around $25,000, according to Reuters. Tesla shares initially fell 6 percent in response to the letter. At the close, Tesla lost 3.6 percent.

Apple is laying off more than 600 employees in its first major round of layoffs since the pandemic. The move comes in the wake of the decision to cancel the vaunted electric car project. The share is still rising by half a percent. Industry peer Samsung plans to double its Texas semiconductor investment to about $44 billion, the Wall Street Journal reported Friday. Samsung itself stated that it expects a tenfold increase in its operating profits on a quarterly basis.

Shares of giant technology companies such as Amazon and Meta rose on Friday, with gains of 3 percent on average. Meta, Facebook's parent company, urged a US judge on Friday to dismiss a competition case brought against the company by the Federal Trade Commission more than three years ago.

HubSpot rose 1.8% after the stock rose 5% on Thursday on a report from Reuters that Alphabet was considering a bid for the marketing software company.

Trump Media & Technology, the parent company of Donald Trump's Truth Social, lost about 12 percent on Friday. The stock closed at a lower level on Thursday.

Johnson & Johnson acquires Shockwave, a medical device maker, for $13.1 billion. Johnson & Johnson stock fell slightly and Shockwave stock rose about 2 percent.

Philips' listing in the United States fell 1.4 percent. Philips warned the Health and Youth Care Inspectorate this month of a new safety issue with its Trilogy-Evo series ventilators.

Source: ABM Financial News

ABM Financial News is a resource for stock market news, video and data, both for real-time trading platforms and trading rooms and for online and offline media publications. The information in this article is not intended to provide professional investment advice or a recommendation to make particular investments.