(New York) The New York Stock Exchange closed its best week of the year on Friday, driven by an easing of the American job market, which suggests that the American central bank (Fed) has finished with its rate hike campaign.
The Dow Jones index advanced 0.66% to 34,061.32 points, the technology-dominated NASDAQ gained 1.38% to 13,478.28 points and the broader index 0.94% to 4358, 34 points.
Over the week, the indices posted their best weekly gain since October 2022, with the Dow Jones climbing more than 5% while the S&P 500 and the NASDAQ gained more than 6%.
The stock market was supported by the fall in bond yields which accelerated on Wednesday with the pause in rate increases observed by the Fed, then on Friday following the employment figures.
The Labor Department revealed job creations down sharply to 150,000 for the month of October compared to 175,000 forecast and 297,000 the month before. The unemployment rate stood at 3.9%, up 0.1 percentage point.
Economic logic dictates that if there are fewer jobs available, workers are in less of a position to demand wage increases, which slows inflation and satisfies investors.
“With wage growth slowing, it’s hard to imagine the Fed will raise interest rates further,” commented Andrew Hunter of Capital Economics. The cost of hourly wages increased by only 0.2%, less than expected.
The turnaround in bond yields was a crucial factor in the rise in stocks this week. “Two-year rates have fallen sharply”, to 4.83% against 4.98% on Thursday, “which radically changes the situation in terms of market expectations on the evolution of rates”, explained Steve Sosnick d ‘Interactive Brokers.
This means that “there is almost no chance that rates will rise again,” assured the analyst.
The chances of another Fed rate hike in December fell to 5% from 20% ahead of Wednesday’s Monetary Committee meeting, according to CME futures calculations.
The yield on ten-year Treasury bills also fell significantly to 4.57%, the lowest since late September, after climbing to 5% last week.
On the stock market, Apple’s action lost 0.52% while the iPhone manufacturer announced disappointing results on Thursday.
“Even though the group beat forecasts for its quarterly earnings and revenue, its sales declined for the fourth quarter in a row,” noted Art Hogan of B. Riley Wealth Management.
Semiconductor manufacturers were on the rise, including AMD (+4.10%), Nvidia (+3.45%), Qualcomm (+1.84%) and Intel (+1.17%).
Wall Street-listed shares of Chinese electric vehicle maker Nio rose 5.65% after the group announced a 10% reduction in its workforce in an effort to cut costs in the face of increased competition around the world. Up sharply during the session, Tesla ended with modest progress (+0.66%).
The payments services group Block, parent company of Square, soared 10.69% as its results exceeded analysts’ forecasts and the company raised its forecasts for the current year.
The online car distributor Carvana, which is going through a difficult time, saw its stock rise 7.89% to $32.28. Despite falling sales, the company managed to achieve a better quarterly profit.
The Toronto Stock Exchange closes higher
Widespread strength fueled by gains in the battery metals and telecommunications sectors allowed the Toronto Stock Exchange to close 1.01% higher on Friday, while major US indexes also advanced.
The S&P/TSX composite index on the Toronto floor gained 198.51 points to end the session with 19,824.85 points.
On the currency market, the Canadian dollar traded at an average rate of 73.08 US cents, up from 72.58 US cents on Thursday.
On the New York Mercantile Exchange, the price of crude oil fell by US$1.95 to US$80.51 per barrel, while that of natural gas rose by 4 US cents to US$3.52. per million BTUs.
The price of gold rose US$5.70 to US$1,999.20 per ounce and copper rose 1 US cent to US$3.68 per pound.
The Canadian Press