Achi news desk-
The S&P 500 Index ($SPX) (SPY) closed Friday +1.11%, the Dow Jones Industrial Average ($DOWI) (DIA) closed +0.80%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.28% .
Stock indexes on Friday posted modest gains. Stocks rallied Friday on optimism that the strength of the US economy will continue to fuel consumer spending and corporate profits. Stocks rose even after a stronger-than-expected payrolls report on Friday raised the prospect of longer interest rate hikes. Easing wage pressures were also supportive of stocks after Friday’s payrolls report showed average hourly earnings in March fell to +4.1% y/y, the smallest increase in 2-3/4 years.
A negative factor for stocks was Friday’s jump in T-note yields after US payrolls rose well above expectations. March nonfarm payrolls rose +303,000, well above expectations and the most in 10 months, strengthening expectations that the Fed will be in any hurry to cut interest rates.
Hawkish Fed comments Friday kept T-note yields higher and suggested the Fed won’t be cutting interest rates anytime soon. Dallas Fed President Logan said “it is far too soon” to think about cutting interest rates on concern that inflation gains may slow and that price growth may fail to cool “in a timely manner” to the Fed’s 2% target. Also, Fed Governor Bowman said that she continues to see a number of risks alongside inflation, and “it is not yet time” to lower interest rates. He added that it is “quite possible” that the level of the federal funds rate consistent with low and stable inflation “will be higher than before the pandemic, and if that is the case, fewer rate cuts will ultimately be appropriate to return our financial policy. stance to a neutral level.”
US nonfarm payrolls rose +303,000 in March, stronger than expected by +214,000 and the biggest increase in 10 months. March’s unemployment rate fell -0.1 to 3.8%, right on expectations.
US average hourly earnings eased in March to +4.1% y/y +4.3% y/y in February, right on expectations and the pace of the slowest increase in 2-3/4 years.
February US consumer credit rose +$14.125 billion, below expectations of +$15.000 billion.
The markets are discounting the chances of a -25 bp rate cut at 6% for the next FOMC meeting on April 30-May 1 and 53% for the following meeting on June 11-12.
Foreign stock markets on Friday were flat lower. The Euro Stoxx 50 fell to a 2-week low and closed down -1.10%. China’s Shanghai Composite was closed for the Tomb Sweeping Day holiday. Japan’s Nikkei Stock Index fell to a 3-week low and closed down -1.96%.
Interest Rates
June 10-year T notes (ZNM24) closed on Friday -15 ticks. The 10-year T-note yield rose +8.1 bp to 4.390%. June T-note prices retreated on Friday on the bigger-than-expected rise in March US nonfarm payrolls, reinforcing speculation that the Fed will be in no rush to cut interest rates. Also, rising inflation expectations are undermining T-note prices as the 10-year breakeven inflation rate on Friday rose to a 4-3/4 month high of 2.399%. T-notes pared their losses on hawkish comments from Dallas Fed President Logan and Fed Governor Bowman, who said it was “much too soon” to think about cutting interest rates.
T-notes gained some support on Friday as US wage pressure eased after average hourly earnings in March eased to +4.1% y/y, the smallest increase in 2-3/4 years.
European government bond yields moved higher on Friday. Germany’s 10-year bund yield rose +3.8 bp to 2.399%. UK 10-year gilt yields rose +4.8 bp to 4.069%.
February Eurozone retail sales fell -0.5% m/m, weaker than expected by -0.4% m/m.
February German factory orders rose +0.2% m/m, weaker than expectations of +0.7% m/m.
Germany’s February import price index fell -0.2% m/m -4.9% y/y, weaker than unchanged m/m expectations and -4.6% y/y.
United States Stock Movers
Newmont (NEM) closed up more than +5% after gold prices rose to a record high and silver prices climbed to a 2-year high.
Western Digital (WDC) closed up more than +3% after Rosenblatt Securities upgraded the stock to buy from neutral with a price target of $115.
Arch Capital Group Ltd (ACGL) closed up more than +3% after its insurance unit announced it will buy Allianz Global’s US MidCorp and Entertainment businesses for $450 million.
Uber Technologies (UBER) closed up more than +3% after Jeffries raised his price target on the stock to $100 from $95.
Eaton Corp Plc (ETN) closed up more than +3% after RBC Capital Markets upgraded the stock to sector outperform with a price target of $371.
Chip stocks rallied on Friday and supported gains in the technology sector. Nvidia (NVDA), Advanced Micro Devices (AMD), ASML Holding NV (ASML), and Applied Materials (AMAT) closed up more than +2%. Also, Broadcom (AVGO), Marvell Technology (MRVL), KLA Corp (KLAC), Lam Research (LRCX), and Microchip Technology (MCHP) closed up more than +1%.
Krispy Kreme (DNUT) closed up more than +7% after Piper Sandler upgraded the stock to overweight from neutral with a price target of $20.
Vertiv Holdings (VRT) closed up more than +5% after Oppenheimer initiated coverage on the stock with an outperform recommendation and a price target of $96.
Shockwave Medical (SWAV) closed up more than +1% after Johnson & Johnson agreed to acquire the company for $13.1 billion at $335 per share.
Tesla (TSLA) closed more than -3% to lead losers in the Nasdaq 100 after a Reuters report said the company canceled its plans to build a low-cost entry-level Tesla car.
Paramount Global ( PARA ) closed down more than -3% after CNBC reported that Skydance Media will keep the company public and either own a significant minority stake or a majority stake in the company by merging its assets and raising new equity.
Lamb Weston Holdings (LW) closed up more than -2% after Citigroup cut its price target on the stock to $106 from $132.
Intel (INTC) closed more than -2% to lead losers in the Dow Jones Industrials and Nasdaq 100 on negative carryover from Wednesday when it gave a gloomy outlook for its factory operations.
Protective packaged food producers moved lower on Friday as the broader market rallied. As a result, Campbell Soup (CPB), Hormel Foods (HRL), JM Smucker (SJM), Hershey (HSY), and McCormick & Co (MKC) closed more than -1%.
CCC Intelligent Solutions (CCCS) closed up more than -1% after announcing a proposed secondary offering of 20 million shares of its common stock.
Earnings Reports (4/8/2024)
Eagle Pharmaceuticals Inc/DE (EGRX) and Waldencast plc (WALD).
More Stock Market News from Barcart
As of the date of publication, Rich Asplund had no positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information check out Barcart’s Disclosure Policy here.
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