new York Interest rate worries on Wall Street investors have boiled over again after a surprisingly strong increase in US jobs. Disappointing balance sheets from large tech companies also clouded the mood on Friday. The Dow Jones index of standard values closed 0.4 percent lower at 33,926 points. The tech-heavy Nasdaq fell 1.6 percent to 12,006 points. The broad S&P 500 lost one percent to 4136 points.
At the beginning of the year, 517,000 non-agricultural jobs were created on the US labor market, far more than expected. Economists polled by Reuters had expected just 185,000 new jobs.
“Whenever we see these big numbers, fear of the Fed comes back with a vengeance as investors worry that the Fed will push things even further than it has, bringing the risk that there won’t be a soft one landing of the economy, but more of a bounce,” said investment strategist Brian Jacobsen of Allspring Global Investments.
After the Fed hiked interest rates by 25 basis points on Wednesday, money markets now expect the US Federal Reserve to hike rates twice more and then pause.
bond yields rise
Uncertainty about the further development of fuel demand from China, the world’s largest oil importer, weighed on oil prices. The North Sea variety Brent became cheaper by around three percent.
Equities in interest-sensitive financial stocks bucked the negative market trend. The big US banks JPMorgan, Wells Fargo, Goldman Sachs, Morgan Stanley and Bank of America rose by up to 1.5 percent. Banks typically thrive with rising interest rates, which bolster their net interest income (NII).
In addition, bond yields rose, which also affects the profitability of financial institutions. The yield on ten-year US Treasuries climbed to 3.517 percent.
Tech companies are spoiling the mood
A slump in profits at Google’s parent company Alphabet, a poor outlook from Amazon and Apple’s missed profit target for the first time since 2016 hit investors. “Whether it’s through fewer device purchases or lower spending on cloud and advertising, the trend is very clear for everyone,” said market analyst Craig Erlam of trading house Oanda.
“Many of the big tech companies have responded by tightening their wallets and announcing mass layoffs, but more is needed to win over Wall Street.” Shares of the Google parent, the online retailer and the iPhone provider initially fell significantly. In the end, Apple managed to gain 2.4 percent. Alphabet lost 2.7 percent, Amazon 8.4 percent.
Wall Street expert Koch on the US labor market: “Analysts have massively misjudged”
Look at other individual values
Starbucks: Shares in the US coffee house chain Starbucks fell more than four percent. Sales in China were four times worse than expected for the first quarter. Ford shares fell nearly eight percent after missing profit targets.
North Current: The hope of a breath of fresh air at Nordstrom gives the US fashion retailer a price jump. Shares are up 24.8 percent. According to insiders, billionaire Ryan Cohen, founder of pet supply retailer Chewy and chairman of the board of directors of video game retailer GameStop, wants to join Nordstrom. He also wants to turn the board inside out by replacing at least one member, according to insiders. The US newspaper “Wall Street Journal” first reported on the planned entry.
Ford: Among the weakest stocks in the S&P 500, Ford shares are down nearly 8 percent. The second largest US automaker had unexpected difficulties at the end of the year. Adjusted operating profit rose less than expected.
More: That’s what fund managers expect in this stock market year