Shares experienced their first major surge of the year as optimism surrounding a decrease in inflation increased, with the Dow Jones Industrial Average increasing by 500. As of Friday, the stock market could potentially be in the green for the week. The Dow Jones Industrial Average INDEXDJX: .DJI has increased by 1.24% in the initial week of the year, and the S&P 500 is up 1.08%. The Nasdaq Composite is also up by 0.31%. INDEXRUSSELL: RUT +1.97%
Traders were seen at the New York Stock Exchange (NYSE) in the New York City area on November 10, 2022. The U.S. stock markets had a surge after the December jobs report and a report on manufacturing revealed signals of a slowing down of inflation while the Federal Reserve is still increasing interest rates. The INDEXDJX: .DJI went up by 558 points, which is equivalent to a 1.70% increase.
The S&P 500 and the Nasdaq Composite had a 1.74% and 1.86% rise (like INDEXDJX: .DJI), respectively. The December job report indicated that the US added 223,000 occupations in that month, which is slightly more than the 200,000 projected by the INDEXDJX: .DJI survey. In addition to that, wages increased by 0.3%, lower than the expected 0.4%.
Michael Arone, the chief investment strategist at State Street Global Advisors, said that the data points to the fact that inflation is heading towards the Fed’s target which is what investors are happy about. Stocks also rose again when the ISM’s non-manufacturing Purchasing Managers’ Index showed that the services industry has contracted in December, indicating that the Fed’s rate hikes are working to slow down the economy.
On Thursday, the INDEXDJX: .DJI dropped more than 300 points after a stronger-than-usual ADP private payrolls report came out, which sparked worries that the Fed might have to keep raising rates, leading to the fear of a recession in the US. With the Friday gains, the stocks are likely to end the week in the green. The Dow has a 1.24% gain, the S&P 500 stands at 1.08%, and the Nasdaq at 0.31%.
The Invesco QQQ trust ETF (QQQ), which follows the tech-heavy Nasdaq 100, had a 0.6% rise. Crude oil went up 1.6% to $74.82 per barrel, and the Energy Select Sector SPDR ETF (XLE) added 2.6%. Natural gas, in contrast, had a 0.4% increase and is still being sold at around $3 per million British thermal units.
European stock markets also experienced an upsurge, with the German DAX up 0.5%, the Paris CAC 40 up 0.8%, and the London FTSE 100 gaining 0.87% in the afternoon. The Innovator IBD 50 ETF (FFTY) had a better performance than the major stock market indexes, gaining 1.2%. Halliburton (HAL), an oil field services company, rose 3.7% and broke out of a cup-with-handle base, hitting the 40.09 purchase point according to a MarketSmith chart.
Salaries figures are inconsistent.
The number of non-farm jobs created in December was 223,000, which was higher than the anticipated figure of 200,000, but not as high as the revised 256,000 created in November. Private job numbers rose by 220,000, surpassing the 175,000 consensus, and more than the 202,000 from November. The decrease from November in total payrolls reflects a slight decrease in the job market, which is what investors have been expecting from the Federal Reserve’s interest rate increases. Manufacturing jobs added 8,000, the same as the revised number from November, but fewer than the 10,000 expected.
The unemployment rate fell to 3.5%, lower than the 3.7% that had been forecast, and lower than the 3.6% from November. Average hourly earnings rose by 0.3% on a month-over-month basis, lower than the 0.4% forecast, and the same as November’s revised figure. The year-over-year rate increased by 4.6%, less than the 5% that had been forecast, indicating that the Fed’s strategies have started to have an impact. The labor participation rate was higher than anticipated at 62.3% compared to 62.2%.
After the employment information was released, the 10-year Treasury note yield decreased by 10 basis points to 3.62%. The chances of the Fed making a 25-basis-point hike at their February meeting stand at 76.2%, which would take the fed funds rate to the 4.5%-4.75% range. Additionally, 23.8% of traders are expecting a 50-basis-point hike, based on the CME Group FedWatch Tool.
The cost decrease of Tesla’s stocks dragged the entire stock market down due to its weight in the group.
Tesla (TSLA) increased today +1.12% after the firm lowered the prices of its Model 3 and Model Y automobiles by 6% to 13% for those available in China. Demand in China has decreased for the vehicles, with the country’s December deliveries reaching 58,000 compared to over 100,000 in November. Tesla stated that they could make the price decrease through enhancements in engineering and cost supervising. The cost reduction may help regain some of the market share that was lost to its competitors. Chinese EV stocks dropped following the announcement. Nio (NIO) went down by more than 11%,
Li Auto (LI) decreased by 10%, while Xpeng (XPEV) was the most impacted, dropping by over 14%. World Wrestling Entertainment (WWE) rose by 18% after the founder Vince McMahon expressed his desire to come back to the organization and offer the firm. Southwest Airlines (LUV) recouped from morning losses and inched up 0.5% after revealing that it expects to post a Q4 loss from $725 million to $825 million due to the cancellation of many of its flights during the holiday season.
The loss is due to the lack of revenue, refunds to passengers, and higher pay for employees. Aehr Test Systems (AEHR) increased by 39% after releasing higher-than-predicted EPS and sales after the market closed on Thursday. DCP Midstream (DCP), an organization that deals with gas and natural gas logistics, went up by 6.4% after the parent company Phillips 66 (PSX) said they would buy all the publicly owned units, totalling to around $3.8 billion. Phillips 66 witnessed only a slight decrease, declining by 0.2% due to the news. Bed Bath & Beyond (BBBY) decreased by more than 15% on top of yesterday’s nearly 30% fall due to speculation that it may be planning to file for bankruptcy.
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