The main Wall Street indexes ended the week with growth, as weak data on the country’s economy raised expectations for monetary policy mitigation from the Federal Reserve.
The blue-chip index Dow Jones Industrial Average advanced by 263.28 points and reached 25,983.94 points thanks to Microsoft and Apple growth. The broader S&P 500 jumped by 1% to 2,873.34 points and the technology sector performed best. The technology index Nasdaq Composite added 1.7% to 7,742.10 points.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 2.32% to 16.30.
The US economy has added 75,000 jobs in May, and for the second time in the last four months, job growth is less than 100,000. The economists surveyed by Dow Jones expected an increase of 180,000 jobs. Wage growth has also slowed.
The market expectations that the Fed will cut interest rates in June rose to 27.5% compared to 16.7% before the release of the data, according to the CME FedWatch. Moreover, markets have a 79% chance of lower interest rates by the central bank by July.
The investors also kept an eye on trade as talks between US and Mexico officials continue.
Mexican ambassador to the US Martha Barcena Coqui told CNBC that negotiations involved a “very good discussion”. Mexico has also agreed to send its national guard to its border with Guatemala to stem the flow of undocumented migrants hoping to reach the US.
President Donald Trump tweeted “there is a good chance” the two countries can make a deal. This would keep the administration from slapping a 5% tariff on all Mexican imports into the US.
Yields on 10-year and 30-year US government bonds declined, with 10-year bonds reaching their lowest level since 2017 of 2.084%. The yield on 30-year government securities decreased to 2.575%.
The main indices posted strong growth for the week. The Dow Jones Industrial Average gained 1,168.90 points, or 4.7%, to 25,983.94 this past week, while the S&P 500 rose 4.4%, to 2873.34, and the Nasdaq Composite advanced 3.9%, to 7742.10. It was the best week for all three indexes since November 2018 and the blue-chip index also interrupted its six-week losing streak.
Corporate stocks performance
The stocks of Apple and Microsoft rose by more than 2.5%, and for the week added more than 8% and 6.3% respectively. Moreover, the shares of Microsoft Corporation rose to all-time highs and its market capitalization exceeded 1 trillion USD.
Exxon Mobil and blue-chip peer Chevron gained 0.4% and 0.7%, respectively. Both have been big boosters this week for the Dow, with Exxon up more than 5%, Chevron posting a 6% gain. The stocks have rebounded sharply as oil prices slowed their three-week pullback.
The banking stock dropped against a backdrop of declining yields. Citigroup, J.P. Morgan Chase and Bank of America declined by more than 1%.
United HealthGroup, the largest healthcare stock in the Dow and one of the index’s worst-performing components this year, enjoyed a decent day Friday, gaining 2.05% to put a dent into a year-to-date loss of almost 3%. On Thursday, UnitedHealth declared a quarterly dividend of 1.08 USD per share, up from the previous quarter’s payout of 0.90 USD per share.
McDonald’s continued its assault on the record books, hitting another all-time high after Bank of America Merrill Lynch reiterated a “buy” rating on the fast food giant with a 220 USD price target, implying decent upside from Friday’s close around 206 USD. According to the analysts, the company has generated strong growth in international markets, and though its traffic has been down in the U.S., its same-store sales have easily outperformed competitors as customers pay higher prices and order more add-ons.
The top performers on the S&P 500 were Illumina Inc (+5.31%), Vertex Pharmaceuticals Inc (+3.43%) and Foot Locker Inc (+3.33%), while on the flipside were CF Industries Holdings Inc (-3.09%), Western Digital Corporation (-2.76%) and Range Resources Corp (-2.67%).