The Dow Jones Industrial Average shed 21 points, or flatline change in percentage, at 35,089; while the S&P 500 and the Nasdaq Composite both rallied with gains of 0.5% and 1.6%, respectively
4.02pm: Markets recover amid jobs report
US stocks closed mixed after the better-than-expected jobs report pointed at the strong economy despite the Omicron fears.
The Dow Jones Industrial Average shed 21 points, or flatline change in percentage, at 35,089; while the S&P 500 and the Nasdaq Composite both rallied with gains of 0.5% and 1.6%, respectively.
Friday’s gains, led by tech stocks, positioned the US benchmarks to record gains for the week of 1.7%
12.00pm: Markets mixed after job data
US indices continued to be mixed midday as investors weighed the unexpectedly better-performing jobs report, deepening the fears of the hawkish rate hike by the Fed.
The Nasdaq Composite surged by 0.9% after Amazon stocks rose by 12%, while S&P 500 was up by 0.1%. The Dow Jones Industrial Average, meanwhile shed 0.3%, or 105 points, at 35,006.
“Financial markets got stunned after a shockingly strong nonfarm payroll report,” said Edward Moya, senior market analyst at The Americas OANDA. “Many on Wall Street were expecting a negative number, instead we saw robust hiring, higher wages and more Americans returned to the workforce.”
Besides, Nasdaq was boosted after yesterday’s “flawless” Amazon earnings report. “Amazon delivered strong eps and AWS revenue beats, reported a $12 billion gain from their bet on Rivian, and raised their annual Prime membership prices.”
However, the next couple of months should be very choppy for equity markets as Fed tightening certainty will clearly take a cue from how quickly supply chain issues improve, Moya noted.
“The Fed clearly is rushing to fix their mistake in tackling inflation and that surging global bond yield environment will make it tough for risky assets,” said Moya. “Selling into rallies may not become the dominant theme, but it is hard to imagine investors will be aggressively bullish here.”
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10.00am: US markets waiver
US benchmarks were mixed after the higher-than-expected employment data early morning Friday, sending signals to investors on the potential Federal Reserve interest rate hikes starting March.
The Dow Jones Industrial Average lost 43 points, or 0.1%, at 35,067, while the tech-laden Nasdaq Composite and the broader S&P 500 both gained 0.7% and 0.3%, respectively.
“467k jobs created and massive upward revisions suggest a fundamentally very strong economy,” said James Knightley, chief international economist at ING. “With companies desperate to hire and the biggest issue being the lack of suitable staff, wages are rising sharply and the Fed will respond.”
He noted that wage pressures will continue to build. “There will still be labour market constraints though with the participation rate remaining stubbornly low (notwithstanding today’s improvement) and trying to fix this should be a priority.”
The narrative of intensifying labour market inflation pressures and strong employment growth when Omicron is supposedly depressing activity only makes it more likely that the Fed will embark on an aggressive series of interest rate increases, Knightley noted.
“We are doubtful on the idea of a 50 base points hike in March as a signal of intent to get inflation under control, given comments from officials, but fully expect five 25bp hikes this year, starting in March,” he said.
9.00am: US unemployment rate unchanged
The January employment report Friday morning revealed that nonfarm payroll employment rose by 467,000— higher than expected— while the unemployment rate changed little at 4% despite fear of Omicron surge.
US stock futures declined post the release of employment data. The Dow Futures shed 0.6%, or 231 points, at 34,740, and the S&P Futures was down by 0.3%, while Nasdaq Futures maintained a flatline change.
US unemployment rate was down by 2.4% compared to the previous year, while the labor force participation rate held at 62.2% in January. The employment-population ratio remained unchanged at 59.7%, the report said.
“The US added 467k jobs in January, far outstripping the forecast for 150k job creations,” said Dan Boardman-Weston, chief information officer at BRI Wealth Management. “It’s an impressive set of figures given that the US has been battling a huge rise in Omicron infections and it shows that employers are still confident enough to continue hiring.”
He noted that the data is likely to add further pressure on the Fed to start raising interest rates and unwinding their trillion-dollar balance sheet. “Markets are likely to be spooked by the numbers and we’d expect that stocks that are more sensitive to higher interest rates will continue to be volatile over the coming months if economic data remains robust.”
Naeem Aslam, chief market analyst at Avatrade commented, “This must have been the biggest miss in history. The data shows things aren’t as bad as the ADP folks suggested.”
6.30am: Payrolls to be closely eyed
US stocks look set to bounce back after Thursday’s tech-induced sell-off, boosted by a jump in Amazon.com Inc and Snap Inc (NYSE:SNAP) shares in premarket trading following earnings reports after the market close, but much will depend on the US January non-farm payrolls report due at 8.30am.
Futures for the Dow Jones Industrial Average edged 0.1% higher on Friday, while those for the S&P 500 index rose 0.5%, and contracts for the tech-laden Nasdaq-100 added 1.1%.
Major US stock indexes tumbled Thursday, dragged down by technology and social media companies as Facebook owner Meta Platforms plunged after a disappointing earnings report.
But there was better news from tech for Friday, as eCommerce giant Amazon.com said its profit nearly doubled over the key holidays quarter, as the company managed to control labor and supply costs better than expected and saw gains in its cloud-computing and advertising businesses.
Ahead of the market open on Friday, earnings are expected from Bristol-Myers Squibb and Regeneron Pharmaceuticals.
Global markets have been highly volatile in recent weeks. Since the start of this year, the Nasdaq Composite has lost more than 11%, while the S&P 500 has slid 6.1%. The Dow Jones, in comparison, has fallen 3.4%.
Investors are nervously awaiting the latest monthly jobs report, with economists estimating that employers added 150,000 jobs in January.
In daily commentary, Walid Koudmani, market analyst at XTB.com said: “As usual for the first Friday of the month, investors will be focusing on the highly anticipated Non Farm Payroll report from the US which will give an overview of the job market situation for January and which is expected to show an increase of only 150,000.
“However, this report will be even more highly focused on since Wednesday’s ADP report surprised markets with a significantly below expectation reading of -301,000 and pointed to increasing difficulties in the world’s largest economy caused in part by the Omicron variant.”
He added: “While rising costs and supply concerns continue to impact the economic recovery, the FED maintains its position that full employment has been reached and that it will adjust it’s policies when it deems necessary in order to stimulate further growth.
“A better than expected result could encourage the Fed to continue its approach, while a disappointing reading could cause further concerns and may shift focus slightly on wage figures and their relation to record level inflation in the world’s largest economy.”
“Either way, today could see a noticeable increase in volatility as investors assess the situation and as stock markets attempt to stabilize after several weeks of significant moves,” the market analyst concluded.