- The Dow Jones surges by over 460 points as investors increase their expectations for potential interest rate reductions
- US data shows a general weakness in the important labor indicator
- Tech stocks propelling Dow Jones upwards
The Dow Jones Industrial Average (DJIA) saw a significant increase of almost 1.2% throughout the course of the trading day on Friday. In response to the disappointing results of the United States Nonfarm Payrolls (NFP) and other significant labor data, which indicated a significant decline in the domestic economy of the United States, this was done.
Consequently, there is now a greater possibility that the Federal Reserve will reduce interest rates in the near future. The average number of new jobs that were created in the United States during the month of April was lower than anticipated, which led to a marginal rise in the unemployment rate. There has been a significant drop in economic activity, as indicated by the fact that the ISM Services Purchasing Managers Index (PMI) has reached its lowest level in approximately sixteen months.
To everyone’s surprise, the markets are defying common sense and demonstrating confidence in the economy of the United States by driving up stock prices, despite the fact that economic data is beginning to show a downward trend. The current rate markets indicate that there is a 64% probability of a rate cut of at least a quarter point occurring during the Federal Reserve’s meeting in September, according to the FedWatch Tool provided by the CME.
The Expectations of a Rate Drop Are Boosted by the Softer Jobs and Earnings Numbers
According to the labor report for the month of April, the United States of America gained 175 thousand net new jobs during the month. This figure is lower than the predicted 243 thousand jobs. The figures for the previous month were increased to 315 thousand from 303 thousand. When compared to the previous month, hourly earnings in April increased by 0.2%, which was slightly lower than the 0.3% growth that was anticipated. It came as a surprise when the ISM Services PMI dropped to 49.4, which was its lowest level in the past sixteen months. This is below the critical threshold of 50.0, which indicates contraction, and it also failed to coincide with the anticipated increase from 51.4 to 52.0 according to the forecast.
In April, there was an increase in the amount of ISM Services Prices Paid, which was the one factor that dampened hopes for a rate cut. The previous reading of 53.4 was followed by a rise to 59.2, which is indicative of ongoing inflationary pressures that are causing problems for the economy of the United States.
Latest Updates From Dow Jones
The Dow Jones experienced a surge of 1.18 percent on Friday, with a number of technology stocks being the primary contributors to this increase. Despite this, the adverse effects were not particularly severe. There was a significant increase of nearly 12% in the stock price of Amgen Inc. (AMGN), which resulted in a gain of approximately 33 points and pushed its trading value above $310.00 per share. Amgen is a biotechnology company. Following closely behind Amgen was Apple Inc. (AAPL), which experienced a 6% increase on Friday, resulting in a rise of 10.35 points and a high of $183.00 per share.
According to the company’s forward guidance, McDonald’s Corporation (MCD) was one of the companies that experienced the greatest declines on Friday, declining by 1.08%. This was due to concerns regarding the company’s declining sales. At the close of the trading day, McDonald’s stock reached a trading value of $270.00 per share, which was a decrease of almost three points from its previous trading value.
Technical Analysis of the Dow Jones
After a strong US NFP labor report, the Dow Jones Industrial Average jumped to an early session peak of 38,840.05, bouncing back from the day’s initial low levels of 38,345.60. This occurred after the report was released with a positive outlook. The Dow Jones Industrial Average (DJIA) is aiming to finish the week around 38,800.00, and the stock market is currently trading in the upper range of today’s price movement.
The Dow Jones index has risen above the 50-day Exponential Moving Average (EMA) at 38,435.55 as a result of the remarkable upward movement that occurred on Friday. Despite the fact that the DJIA is currently trading above the 200-day exponential moving average at 36,800.58, the bulls continue to maintain control over the long-term price movement.