In a significant rebound, Wall Street achieved its highest level in 20 months on Friday, spurred by a robust U.S. job market report. The S&P 500 secured its sixth consecutive winning week, marking its lengthiest streak in four years with a 0.4% rise. The Dow Jones Industrial Average and the Nasdaq composite also saw gains of 0.4%, propelling optimism in the market.
Following the positive job market report, bond yields surged, with U.S. employers adding more jobs than anticipated last month. This unexpected strength in employment, coupled with higher-than-expected wage growth and an improved unemployment rate, alleviated concerns about an impending recession. Notably, energy-related stocks experienced the largest gain among the S&P 500 sectors, rising 1.1% on the back of strengthened oil prices.
Among the notable market moves, Carrier Global’s shares soared by 4.5% as the company announced the sale of its security business, Global Access Solutions, to Honeywell for $4.95 billion. However, the market remains cautious about the potential inflationary impact of a resilient job market, which might prompt the Federal Reserve to consider raising interest rates further.
Brian Jacobsen, Chief Economist at Annex Wealth Management, expressed concerns that the Federal Reserve might “err on the side of overdoing it” in response to fears of giving up on stabilizing the job market. While the job data appeared decent, Bank of America economists emphasized the expectation that economic activity would slow without crashing.
Despite the positive sentiment, there are lingering worries on Wall Street that a persistent job market strength could fuel inflation, potentially leading the Federal Reserve to prolong its current interest rate levels. The central hope of the stock market, a decrease in inflation, might face challenges if the Federal Reserve decides on a more cautious approach.
As the Federal Reserve prepares to announce its next move on interest rates, the yield on the 10-year Treasury rose to 4.22%, relaxing pressure on stocks from its previous peak in October. Big Tech stocks, including Nvidia, Apple, and Microsoft, posted gains, while Alphabet, Google’s parent company, faced a 1.4% dip after its AI offering excitement.
In summary, the S&P 500 rose by 18.78 points to 4,604.37, the Dow added 130.49 to 36,247.87, and the Nasdaq climbed 63.98 to 14,403.97. Investors now eagerly await the Federal Reserve’s decision on interest rates, with optimism prevailing but caution lingering amid concerns about potential inflationary.