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Wall Street made modest gains on Friday as monthly jobs report data indicated a strong labor market. Market participants were, however, apprehensive about impending recession as the bond yield curve inverted for the third time in the week. The hawkish Federal Reserve also kept the investor confidence down. All three major stock indexes ended in green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.4% or 139.92 points to close at 34,818.27. Nineteen components of the 30-stock index ended in the green zone, one remained unchanged, while ten remained in the negative territory. The tech-heavy Nasdaq Composite finished at 14,261.50, gaining 0.3% or 40.98 points due to modest performance of technology stocks.
Meanwhile, the S&P 500 gained 0.3% to end at 4,545.86. Eight out of 11 broad sectors of the benchmark index closed in the green zone. The Financials Select Sector SPDR (XLF), the Industrials Select Sector SPDR (XLI) and the Technology Select Sector SPDR (XLK) tanked 0.3%, 0.8%, 0.3% and 1.5%, respectively while The Real Estate Select Sector SPDR (XLRE) grew by 2%.
The fear-gauge CBOE Volatility Index (VIX) was down 100% to close at 112.22. A total of 11.45 billion shares were traded Friday, lower than the last 20-session average of 13.8 billion. Advancers outnumbered decliners on the NYSE by a 1.81-to-1 ratio. On Nasdaq, a 1.35-to-1 ratio favored advancing issues.
Strong Labor Market
Investor motivation was upbeat about the March jobs data coming in as the economy added 431,000 jobs. Although this missed the estimate of 474,000, the unemployment rate falling to a new two year low of 3.6% was good news. Data for February was also revised higher to 750,000 as compared to the earlier reported 678,000. Confirmation of a strong labor market was one of the major reasons behind the indexes gaining on an otherwise grim day, but upcoming policy tightening by the Federal Reserve keeps the investors modest about the situation as it will also impact the jobs market.
Yield Curve Inversion
The U.S. Treasury yield curve inverted on Friday as the 2-year bond ended the day 6 basis points clear of the 10-year bond for the first time since 2019. Earlier in the week, the yields of the 5-Year and 30-Year U.S. Treasury Notes had also inverted.
The inversion of the yields of the 2-year and 10-year bonds are especially looked upon as the indicators of recession as these are the two most frequently traded bonds in the market. Consequently, share of major banks like The Citigroup Inc. (C - Free Report) and Bank of America Corp.(BAC - Free Report) plummeted 2% and 0.8%, respectively. Citigroup carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
Average hourly earnings rose by $0.13 to $31.73 in March. Over the past 12 months, average hourly earnings have increased by 5.6%. In March, average hourly earnings of private sector production and non-supervisory employees rose by $0.11 to $27.06.
The average workweek went down by 0.1 hour to 34.6 hours in March. The average workweek for all employees was unchanged at 40.7 hours, and overtime fell by 0.1 hour to 3.4 hours. The average workweek for production and non-supervisory employees on private non-farm payrolls declined by 0.1 hour to 34.1 hours.
Construction spending during February 2022, as reported by The U.S. Census Bureau, was estimated at a seasonally adjusted annual rate of $1,704.4 billion, 0.5% above the revised January estimate of $1,695.5 billion. The February figure is 11.2% above the February 2021 estimate of $1,533.3 billion.
The ISM Manufacturing Index reported March data of 57.1% as opposed to the period estimate ofn 58.7%. The reported value for the prior period was 58.6%.
Weekly Roundup
Last week was an average one for Wall Street. Two of the 3 major indexes finished marginally in green. The Nasdaq Composite and S&P 500 increased 0.7% and 0.06% respectively over the week, while Dow went down 0.12%. Changing dynamics of the Russia-Ukraine War dashed hopes of a cease-fire and raised concerns over Fuel prices and supply-chain logistics. There were genuine apprehensions about an impending recession as the U.S Bond yield curve inverted on three days of the week.
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Stock Market News for Apr 4, 2022
Wall Street made modest gains on Friday as monthly jobs report data indicated a strong labor market. Market participants were, however, apprehensive about impending recession as the bond yield curve inverted for the third time in the week. The hawkish Federal Reserve also kept the investor confidence down. All three major stock indexes ended in green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.4% or 139.92 points to close at 34,818.27. Nineteen components of the 30-stock index ended in the green zone, one remained unchanged, while ten remained in the negative territory. The tech-heavy Nasdaq Composite finished at 14,261.50, gaining 0.3% or 40.98 points due to modest performance of technology stocks.
Meanwhile, the S&P 500 gained 0.3% to end at 4,545.86. Eight out of 11 broad sectors of the benchmark index closed in the green zone. The Financials Select Sector SPDR (XLF), the Industrials Select Sector SPDR (XLI) and the Technology Select Sector SPDR (XLK) tanked 0.3%, 0.8%, 0.3% and 1.5%, respectively while The Real Estate Select Sector SPDR (XLRE) grew by 2%.
The fear-gauge CBOE Volatility Index (VIX) was down 100% to close at 112.22. A total of 11.45 billion shares were traded Friday, lower than the last 20-session average of 13.8 billion. Advancers outnumbered decliners on the NYSE by a 1.81-to-1 ratio. On Nasdaq, a 1.35-to-1 ratio favored advancing issues.
Strong Labor Market
Investor motivation was upbeat about the March jobs data coming in as the economy added 431,000 jobs. Although this missed the estimate of 474,000, the unemployment rate falling to a new two year low of 3.6% was good news. Data for February was also revised higher to 750,000 as compared to the earlier reported 678,000. Confirmation of a strong labor market was one of the major reasons behind the indexes gaining on an otherwise grim day, but upcoming policy tightening by the Federal Reserve keeps the investors modest about the situation as it will also impact the jobs market.
Yield Curve Inversion
The U.S. Treasury yield curve inverted on Friday as the 2-year bond ended the day 6 basis points clear of the 10-year bond for the first time since 2019. Earlier in the week, the yields of the 5-Year and 30-Year U.S. Treasury Notes had also inverted.
The inversion of the yields of the 2-year and 10-year bonds are especially looked upon as the indicators of recession as these are the two most frequently traded bonds in the market. Consequently, share of major banks like The Citigroup Inc. (C - Free Report) and Bank of America Corp.(BAC - Free Report) plummeted 2% and 0.8%, respectively. Citigroup carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
Average hourly earnings rose by $0.13 to $31.73 in March. Over the past 12 months, average hourly earnings have increased by 5.6%. In March, average hourly earnings of private sector production and non-supervisory employees rose by $0.11 to $27.06.
The average workweek went down by 0.1 hour to 34.6 hours in March. The average workweek for all employees was unchanged at 40.7 hours, and overtime fell by 0.1 hour to 3.4 hours. The average workweek for production and non-supervisory employees on private non-farm payrolls declined by 0.1 hour to 34.1 hours.
Construction spending during February 2022, as reported by The U.S. Census Bureau, was estimated at a seasonally adjusted annual rate of $1,704.4 billion, 0.5% above the revised January estimate of $1,695.5 billion. The February figure is 11.2% above the February 2021 estimate of $1,533.3 billion.
The ISM Manufacturing Index reported March data of 57.1% as opposed to the period estimate ofn 58.7%. The reported value for the prior period was 58.6%.
Weekly Roundup
Last week was an average one for Wall Street. Two of the 3 major indexes finished marginally in green. The Nasdaq Composite and S&P 500 increased 0.7% and 0.06% respectively over the week, while Dow went down 0.12%. Changing dynamics of the Russia-Ukraine War dashed hopes of a cease-fire and raised concerns over Fuel prices and supply-chain logistics. There were genuine apprehensions about an impending recession as the U.S Bond yield curve inverted on three days of the week.