The S&P 500 was 0.1% higher in early trading and remained on track for a modest gain for the week
US stock indexes are showing a steady performance this Friday, despite a mixed bag from the US job market that analysts say might not shake up the financial markets significantly.
The S&P 500 has seen a slight lift of 0.1% in early trading, which could lead to a small weekly uptick. At the same time, the Dow Jones Industrial Average slightly dipped by 14 points, less than a 0.1% decrease, as of 9:35 am Eastern time, but the Nasdaq composite is experiencing a rise of 0.3%.
In contrast, the bond market witnessed more vigorous activity where Treasury yields climbed post the release of the jobs report. The cachet from the employers’ end was not as expected – they onboarded fewer workers last month compared to economists’ forecasts and only half the number who joined in December.
However, the very same jobs report offered silver linings for workers: a dip in the unemployment rate and wage increments exceeding expectations. Putting it all into perspective, market experts suggest this report probably won’t be a game-changer for the Federal Reserve regarding interest rate decisions, especially considering peculiar incidents such as California’s wildfires during the month may have distorted the figures.
“We think the Fed is likely to be cautious about reading too much into today’s report,” commented Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management. The Federal Reserve initiated cuts to its main interest rate in September to alleviate pressure on the economy and job market.
However, it signalled at the end of the year that it might make fewer cuts in 2025 than previously anticipated due to concerns about persistently high inflation. Wall Street favours lower interest rates as they can prompt investors to pay higher prices for stocks and other investments.
The expectation on Wall Street was for Friday’s report to be neither so weak that it sparked concerns about a faltering US economy nor so strong that it suggested upward pressure on inflation. For Scott Wren, senior global market strategist at Wells Fargo Investment Institute, the jobs report did not alter his prediction for the Fed to cut the federal funds rate just once in 2025.
This is slightly more conservative than many traders on Wall Street, who collectively see a nearly 50% chance that the Fed will cut at least twice, according to data from CME Group. Naturally, some traders are also wagering on the possibility of zero cuts.
Wren suggests that financial markets could remain unstable in the near term, not only due to uncertainty about interest rates but also because of President Donald Trump’s tariffs and other global unknowns. Concerns rattled global markets earlier this week over fears of a harsh international trade war, but some tensions have tempered as President Trump issued 30-day exemptions from tariffs to Mexico and Canada.
Nonetheless, European countries could be next in line, with economists from Bank of America warning ‘Europe might be next, and even if the final outcome is benign, uncertainty could weigh on global investment,” according to a report from BofA Global Research.
Meanwhile, the spotlight remains on US corporate giants as they reveal their profit reports for the final quarter of 2024. Amazon, a titan on Wall Street, exceeded earnings expectations for the end of 2024 yet saw its shares dip by 2.2%. Investors seemed more concerned with the company’s revenue forecast, which didn’t meet analysts’ predictions.
Nevertheless, gains were noted elsewhere in the market; Expedia Group and video-game giant Take-Two Interactive Software helped cushion the blow with their earnings surpassing expectations. Shares in Expedia soared 13.8%, while Take-Two enjoyed a 10.9% increase.
As for the bond market, it experienced movement too, with the yield on the benchmark 10-year Treasury note inching up to 4.47% from 4.44% late on Thursday. Looking overseas, trading was a mixed bag with variable performance across stock markets in Europe and Asia.
