Wall Street rebounds on Friday despite weak US jobs data
Quick Look
- U.S. stock markets closed higher on Friday, ending a losing week on a forgiving note after weaker-than-expected jobs data dampened expectations of a Fed rate hike in October.
- The Dow Jones index rose 0.5 percent, the S&P 500 rose 0.7 percent and the Nasdaq rose 1.2 percent.
- Tesla shares gained 4.7 percent, while Nike, Western Digital and Seagate Technology posted losses.
AI-generated summary
Why It Matters
The US Federal Reserve had signaled in previous weeks that a further interest rate hike was possible to combat inflation. The labor market data is considered an important indicator of economic development and directly influences the Fed's monetary policy decisions.
The week didn't go particularly well on Wall Street. At the end of the week things are going up again a bit. This is also because the labor market data in the USA is worse than expected.
The US stock exchanges rose on Friday, putting a conciliatory end to a predominantly loss-making week. The gains at the end of the week were triggered by weaker than expected labor market data. These dampened expectations that the US Federal Reserve could raise interest rates this month. The U.S. economy added just 29,000 new nonfarm jobs last month, while economists polled by Reuters had expected 90,000.
The Dow Jones Index closed 0.5 percent higher at 51,177 points. The broader S&P 500 gained 0.7 percent to 7,723 points. The Nasdaq technology exchange index rose by 1.2 percent to 27,191 points. On a weekly basis, the Dow lost 1.3 percent and the S&P 500 0.3 percent. The Nasdaq, however, gained 0.5 percent.
"Today's news is OK in that it means the economy isn't booming," said Robert Bernstone, head of trading at SummitTX Capital. "But there is a concern about the economy, there is a concern about inflation, so cautious optimism is the way people are looking at the situation."
Expectations for a Fed rate hike in October weakened after the data was released. Traders now estimate the likelihood that the Fed will raise interest rates by 25 basis points in October at about 21 percent, compared with about 26 percent before the report was released. A week ago it was 64 percent.
Among the biggest winners were Tesla shares, which rose 4.7 percent. The shares of the chip manufacturer Nvidia also gained 1.3 percent.
Nike, however, was among the losers with a loss of 3.6 percent. The sporting goods manufacturer had forecast a surprisingly strong decline in sales for the year as a whole.
The shares of storage providers Western Digital and Seagate Technology fell by around ten percent. The Japanese business newspaper "Nikkei" had previously reported that the technology group Toshiba wanted to double its production capacity for hard drives for AI data centers.
What to Watch
AI outlook — possibilities, not facts
The Fed will not raise interest rates by 25 basis points in October.
Likely · Within weeks
Open Questions
- How will the Fed respond to the continued weak labor market data in the coming months?
- Will Toshiba's announcement of doubling hard drive capacity have a long-term impact on the storage market?
- How sustainable is Wall Street's recovery given the underlying economic weakness?
