Investors on Wall Street and around the world breathed a sigh of relief on Friday after fresh macroeconomic data revealed a positive outlook for the US economy. The New York stock market experienced a significant rise, with the S&P 500 index closing up 1.3 percent, its best performance since February. The Dow Jones index and Nasdaq also saw increases of 1.2 percent and two percent, respectively.
The recent employment figures were seen as a gold rush scenario in the stock market, indicating relief from inflationary pressures and expectations for interest rate cuts by the Federal Reserve. Weaker-than-expected US labor market numbers raised investor expectations for interest rate cuts by the Fed, which contributed to the rise in stock prices on Wall Street and other global stock exchanges.
Adam Farstrup, Director of Americas Operations at Schroders, noted that the stock market has been experiencing nervousness recently amid concerns about the Fed’s monetary policy. However, signs of easing inflation on Friday suggested that the Fed may cut interest rates this year. This shift in expectations has now pushed back the first interest rate cut to September from November.
In April, US non-agricultural jobs saw an increase of only 175,000, lower than forecasted at 240,000. This led to anticipation of an interest rate cut in September instead of November as previously expected. Tech giant Apple’s stock rose six percent on Friday after announcing a $110 billion share buyback and reporting better-than-expected interim results. Other tech stocks like Nvidia, Microsoft, Alphabet, and Amazon also experienced gains on Friday.
Overall, the positive trading week on Wall Street and other global stock exchanges was largely driven by investors’ optimism about potential interest rate cuts and their view of inflationary pressures easing in the coming months.
In summary: The recent US employment figures sparked a positive reaction in the stock market due to relief from inflationary pressures and expectations for interest rate cuts by the Federal Reserve. Investors remained optimistic about potential interest rate cuts as well as future economic conditions during this trading week on Wall Street and other global exchanges.
