The main US indexes ended the week with strong growth after some positive news from the market.
The US Department of Labor has published a report according to which the country’s economy has added 312,000 jobs in December. This is well above the expected 176,000 new jobs. Later on Friday, the Federal Reserve Governor Jerome Powell said the central bank would be patient with rising interest rates by reassuring the fears of tightening monetary policy in the near future.
The blue-chip index Dow Jones Industrial Average finished trading with an increase of 743 points, or 3.2%, reaching a level of 23,433.16 points. The broader index S&P 500 rose by 3.4% to 2,531.94, with the technology sector adding more than 4% to its value. The technology index Nasdaq Composite rose by 4.26% to 6,738.86 points. On Thursday, the indexes fell sharply due to Apple’s stock price depreciation.
For the week, the blue-chip index Dow Jones added 1.61%, while S&P 500 increased by 1.86% and Nasdaq rose by 2.34%.
Boeing pushed Dow up after the report on jobs calmed down fears that the economy was slowing down. The aircraft manufacturer’s stock rose by 5.2%.
Growth in technology companies has also boosted the wider market. Netflix and Intel shares rose by 9.7% and 6.1% respectively. Netflix increased its value after Goldman Sachs made a recommendation for its stocks to “Buy”. Intel’s stock appreciated after Bank of America Merrill Lynch raised its stock ratings from “Neutral” to “Buy”.
The growth of Netflix and Intel has stimulated other technology shares. Facebook, Amazon, Apple and Alphabet gained more than 4%.
On the macroeconomic level, China and the United States have announced they will try to reach a trade deal. The Chinese Ministry of Commerce has informed that both countries will hold negotiations at the level of Deputy Ministers in Beijing on January 7 and 8.
On the bond markets, the yields on 10-year and 30-year US government bonds grew by six basis points to a level of 2.627% and 2.955%, respectively.
In the forex markets, the dollar index, which measures the value of the greenback against a basket of six major currencies, wiped out its initial strong increase, dropping by 0.13% to 96.18 points. The Euro appreciates against the US dollar by 0.04% to a level of 1.1395 USD.
The crude oil prices rose in the commodity markets after the proposed US-China trade talks calmed down the fears of a slowdown in the global economy, but the increase was limited due to the US announcement of a sharp rise in refinery stocks.
The futures on the Brent oil added 1.11 USD to its value to 57.06 USD per barrel. The US light crude WTI crude finished the session with an increase of 0.87 USD to 47.96 USD per barrel. For the week, Brent grew by about 9% and WTI by about 6%.
Jerome Powell hinted for pausing interest rates hikes
The indexes went up after Jerome Powell hinted that the central bank could pause raising the interest rates, which markets highly expected.
“As always, there is no preset path for policy. And particularly with muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves”, said Jerome Powell.
The Fed is “always prepared to shift the stance of policy and to shift it significantly” in order to achieve its dual mandate of full employment and stable prices.
“No one knows whether this year will be like 2016”, said Jerome Powell. “But what I do know is that we will be prepared to adjust policy quickly and flexible and to use all of our tools to support the economy should that be appropriate to keep the expansion on track, to keep the labour market strong and to keep inflation near 2%”, added he.
Fears that the Federal Reserve may make a mistake by tightening its monetary policy too fast have contributed to the recent volatility in the financial markets.