The strong labor market data gave wings to Wall Street stocks, rebounding from a two-day loss. The data showed the US job creation was stronger than expected in April.
The blue-chip index Dow Jones Industrial Average climbed 197 points, or 0.75%, to 26,504 points after two consecutive days of losses. The broader S&P 500 added 1% to 2,945.64 points, while the technology Nasdaq Composite added 1.4%. All 11 sub-sectors in the S&P 500 were into the green, driven by the profits of the consumer sector, the energy and industrial companies. All three sub-indexes are roughly zero for the week.
The market halted two straight days of losses driven by Federal Reserve Chairman Jerome Powell’s comments Wednesday on low inflation pressures being “transitory”, The comments lowered the odds of an insurance rate cut, which disappointed investors.
Since the monetary policy has been the focus of the markets over the past few days, on Friday the markets turned their attention to the Labor Market data. The US economy added 263,000 new jobs in April and unemployment fell to 3.6%, its lowest level since December 1969. The growth of jobs outside agriculture exceeded Wall Street’s expectations for 190,000 jobs and unemployment of 3.8%.
The wages also continued to grow, albeit not as much as analysts predicted. Albeit the sentiment in the service sector deteriorates more than expected, does not affect the long-term sentiment of the stock exchange.
In the bond markets, the yields on 10-year and 30-year US Treasuries fell to 2.52% and 2.915%, respectively.
Corporate stocks performance
The stocks of Amazon rose by 3.2% after Warren Buffett announced that had bought shares in the online retailer through his investment firm Berkshire Hathaway for the first time.
The shares of the operator of the travel portal Expedia suffered from the disappointing results for the first quarter and fell by 1.6%.
The shares of Walt Disney declined by 0.1%. According to a media report, the entertainment company has sold 21 regional sports channels to the US media company Sinclair Broadcast at a price below market expectations.
The shares of Fiat Chrysler rose by 6% amid the optimistic outlook of the car maker. In contrast, the first quarter data were weak.
Beyond Meat – the fresh listed producer of meat substitute products, also caused a lot of attention after closing stocks on the first trading day with just over 160% premium compared to the issue price. Now the company added another 8% to its market value.
Tesla’s stocks added another 4% to its value. The company can raise up to 2.7 billion USD in fresh capital with its new shares and convertible bonds program.
The shares of Weight Watchers grew by 13%. The company convinced investors with their latest financial statement.
The hardware maker Arista Network lost 15% of its market value after poor guidance. Cisco also suffered a slight decline, falling by 0.6%.
Renewable Energy shares have collapsed by more than a fifth. Biomass Diesel Producer has released unexpectedly weak financial reports.
The best performers of the session on the Dow Jones Industrial Average were Caterpillar Inc (+2.88%), Intel Corporation (+2.37%) and Microsoft Corporation (+2.13%), while on the opposite side were Home Depot Inc (-0.22%) and UnitedHealth Group Incorporated (-0.22%).
Corporate earnings reports
The largest European bank HSBC Holdings reported a 31% YoY increase in EBITDA to 6.2 billion USD. The revenue of the British bank rose 5% to 14.4 billion USD, which exceeds analysts’ expectations. HSBC realizes 80% of its profits in Asia, while Europe accounts for around 1% – a fact that highlights the importance of Hong Kong and China for its revenue.
The weakening automotive market and the US-China trade war have significantly shrunk the profits of the German chemical concern BASF. The company’s sales revenue rose by 3% YoY to 16.2 billion EUR, but operating profit (EBIT) declined by 22% to 1.76 billion EUR despite positive currency effects. Consolidated net profit decreased by 16% to 1.4 billion USD. As expected, the business with basic products and plastics is developing very poorly.