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Wall Street inched higher despite fewer jobs created by the private sector

Wall Street

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The main indexes of the New York Stock Exchange have ended today’s trading session despite the slowdown in the US private sector employment.

The blue-chip index Dow Jones Industrial Average added 45.98 points, or 0.18%, to 26,225.11 points. The broader benchmark S&P 500 gained 0.21% to 2,873.27 points. The technology index Nasdaq Composite rose by 46.71 points, or 0.60%, to 7,895.40 points.

Dow Jones

The technology sector was performing particularly strong, while companies in the energy sector suffered mainly losses. Despite optimism on U.S.-China trade riding high, trade-sensitive industrials struggled to close above the flatline for the day, pressured by a slump in defense companies.

The jobs created by the US private companies report a slight growth in March, which is the slowest pace of increase since the end of 2017. This is a sign of a potential weakness of the labor market before the monthly report, which is expected to be released on Friday. The private sector in the US has created 129,000 jobs in March, which is below the analysts’ estimates of employment growth by 184,000 jobs, according to a regular monthly report by ADP.

By comparison, 197,000 jobs were created in February. Moreover, for the first time since December 2016, the number of newly created jobs in the production sector has decreased.

In the bond markets, the yields on the 10-year and 30-year US government bonds rose to 2.521% and 2.93% respectively.

Corporate stocks performance

Caterpillar shares fell by 0.7% after Deutsche Bank lowered its rating from “Buy” to “Hold” and lowered its 12-month target.

The stocks prices of the semiconductor manufacturers are rising against the backdrop of positive trade talks between the US and China. VanEck Vectors Semiconductor ETF (SMH) rose by 1.8%, driven by the appreciation of Advanced Micro Devices (AMD), which stocks added 8.5%.

Meanwhile, Apple closed 0.7% higher despite Nomura pouring cold water on expectations that the company’s services revenue would offset slower iPhone sales sooner rather than later. App Store growth slowed to 15% in the March quarter from 18% in the December quarter, according to Nomura. The price cut in iPhones are doing little to lift demand for the company’s flagship smartphones amid ongoing softness in the China smartphone market, the bank added.

The stocks of the defense contractor company Raytheon fell by 4.5%, while its competitors Northrop Grumman and Lockheed Martin wiped out 2.4% and 1.92%, respectively.

In consumer discretionary, GameStop played its way into trouble, falling 4.7% after its guidance on full-year earnings fell short of Wall Street consensus estimates. Following the dour guidance, Morgan Stanley highlighted declining trade-ins of older games as a headwind on GameStop’s used-game sales and gross margin.

Corporate earnings reports

The health and wellness producer Landec Corporation lower than expected earnings per share in the fourth quarter. The company posted Q4 EPS of 0.12-0.15 USD of 150-153 million USD sales, compared to market expectations for EPS of 0.22 USD and sales of 154 million USD. For the fiscal year 2019, Landec Corporation expects revenue growth of 6% to 7% and net income to be 0.15-0.18 USD per share, lower than prior guidance of 0.25-0.29 USD per share.

Xpel Technologies reports a fiscal year revenue increase of 63.3% YoY to 109.9 million USD. The gross margin increased 560 bps to 30.4%, due to the reductions in per unit material cost and reductions in non-product related costs. Operating margin increased 747 bps to 10.74%, while EBIDTA margin increased 648 bps to 11.83%. Cash and equivalents were 3.97 million USD (+13.4% YoY).