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The future of U.S. equities reduces losses after a strong employment report

US stock futures traded up and changed amid small losses after the April employment report showed another strong month for job gains.

Dow Jones Industrial Average futures fell 0.1%, with the blue-chip index falling by more than 1,000 points in one day, the worst day since 2020. The S&P 500 futures fell 0.2% and the Nasdaq-100 Heavy Technology fell 0.2%. .

Futures, which fell by about 0.4% before the release of the data, rose sharply in the minutes following the report.

The economy added 428,000 jobs in April and the unemployment rate stood at 3.6%. Economists surveyed by The Wall Street Journal forecast that 400,000 jobs would be created in April and that the unemployment rate would fall to 3.5% – where it was before the pandemic and was five decades low – from 3.6%.

In recent days, stocks have been frustrated as investors have tried to gauge the impact of the Federal Reserve’s rate hike on the economy. Investors are caught up in competing expectations: rate hikes will be significant enough to control rapidly rising inflation, but not so large as to impede economic growth.

“The market is trying to balance whether the central banks are more concerned about inflation or slowing growth and the market has clearly decided that they are more concerned about inflation,” said Altaf Kassam, head of investment strategy for Europe, the Middle East and Africa. State Street Global Advisors. “If the Fed is to address inflation at all costs, it will certainly have an impact on equities.”

Ahead of the opening bell, DoorDash rose nearly 7% after the food distribution company reported a quarterly revenue rise on Thursday night. DraftKings also rose nearly 7% after rising its annual guidance.

US stocks rose on Wednesday after the Federal Reserve raised interest rates by half a percentage point, boosting relief by not considering further increases in the future, but that relief faded as investors revised their stock forecasts on Thursday.

Federal Reserve Chairman Jerome Powell said Wednesday that the central bank approved a mid-percentage-point interest rate hike in a four-decade-high high in a bid to reduce inflation. Photo: Win McNamee / Getty Images

U.S. market valuations have shifted from “wealth to wealth” over the past 10 years as share prices have risen more than gains, said Frank Benzimra, head of Asia’s equity strategy at Société Générale. But as interest rates rise, the value that investors place on companies ’future cash flows is declining, he said.

In bond markets, the yield on the 10-year benchmark U.S. Treasury bill rose 3.079% on Thursday from 3.066%, the highest level since November 2018. Bond yields rise as prices fall.

One reason for the change in markets is that investors have no apparent shelter because bonds and gold have come under pressure from rising interest rates.

“You need a buffer to deal with that volatility, but fixed income is not the buffer it once was,” Mr. Kassam said.

Crude Brent, a global oil benchmark, rose 1.8% to $ 112.87 a barrel, and the European Union extended its latest gains driven by hopes that it would ban Russian oil imports in response to the invasion of Ukraine. Gold prices rose by 0.4%

Bitcoin fell 1.6% to $ 35,854 after falling more than 8% on Thursday as market sales prompted investors to take risky bets like cryptocurrencies.

Japanese equities faced a broader downward trend as the Tokyo market reopened three days after the holidays.


Photo:

kazuhiro nogi / Agence France-Presse / Getty Images

Abroad, both Asian and European benchmarks fell, following US losses, and the Hang Seng Heavy Technology Index fell sharply, falling 3.8%. In mainland China, the Shanghai Composite Index fell 2.2%. In Europe, the Stoxx Europe 600 pan-continental fell 1.5%.

British Airways owner International Consolidated Airlines Group fell more than 6% after a loss in operations in the first quarter. Adidas fell more than 4% after warning that sales in China would fall.

Shares of Japan countered a broader downward trend as the Tokyo market reopened after a three-day break, with the Nikkei 225 gaining 0.7%.

Write Will Horner to William.Horner@wsj.com and Rebecca Feng to rebecca.feng@wsj.com

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The future of U.S. equities reduces losses after a strong employment report

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