NEW YORK (Dow Jones) — Hopes of a June pause in interest rate hikes by the US Federal Reserve kept investors on Wall Street in a buying mood on Friday. The fact that the US Senate ended the debt drama and prevented the government from defaulting at the last minute was well received. However, following the clear vote in the House of Representatives, the market had already assumed approval from the Senate to be “certain”. In this respect, the suspension of the debt ceiling only supported the stock market to a very limited extent. The Dow Jones index rose 2.1 percent, while the S&P 500 and Nasdaq Composite rose 1.5 percent and 1.1 percent, respectively. The course winners were clearly in the majority with 2,567 (Thursday: 2,139). They faced 431 (836) losers while 62 (104) titles closed unchanged.
In the short term, however, the interest rate issue was in focus, and the labor market report for May should have fueled the debate. Because US job growth in May significantly exceeded expectations. The strong data complicates the Federal Reserve’s fight against high inflation. However, the separately surveyed unemployment rate rose somewhat more sharply than expected in May, apparently because the favorable job prospects are encouraging more people to look for work. US hourly wages rose within the expected range month-on-month, which helped allay inflation concerns.
Opinions on the market regarding the relevance of the data differed: recently, convincing labor market data such as job vacancies had little impact on interest rate expectations. Rather, these were characterized by weak data, which painted the picture of a slowly deteriorating economic situation – despite an unchanged tight labor market. On Friday, the interest rate futures market priced a rate hike in June from 25 basis points only with a probability of 28 percent. That was just a few points higher than before the data.
“The Fed is clearly sending the message that it no longer believes it is urgent to raise interest rates, while at the same time letting investors know that their job of fighting inflation is not over,” said Swissquote Bank analyst Ipek Ozkardeskaya. This is how the Fed controls market expectations. There will be no rate hikes in the short term, but at the same time the Fed does not want to have a lasting effect on market conditions through excessively dovish speculation.
Yields rise with jobs data
Things looked different on the bond market, where falling prices pushed yields up. The momentum of rising yields clearly gained momentum with the labor market data. The price gains on the stock markets caused investors to turn their backs on the bond market. More investors are also likely to have bet on a rate hike.
The US dollar rallied: The dollar index was up 0.5 percent after being marginally negative ahead of the data. The appreciation of the dollar, rising market interest rates and reduced interest in “safe havens” weighed on gold prices. Oil prices, on the other hand, continued to rise sharply. Speculations that the Opec+ group would cut production at their upcoming meeting increased again, it said.
Amazon is messing up Telekom courses
The shares of the telecommunications provider Verizon (-3.2%), T-Mobile US (-5.6%) and Dish (+16.2%) started to move. In retail, reference was made to a possible market entry by Amazon (+1.2%). As Bloomberg reports, Amazon is currently negotiating with wireless carriers to provide cellular service to their Prime members at low cost or even free. Amazon is in talks with Verizon, T-Mobile US and Dish about the lowest possible prices. Apparently, the market sees Dish as a possible winner of a deal, while top dogs Verizon and T-Mobile US are losers. Because an agreement should burden the margins of the two major providers, it is said. AT&T (-3.8%) denied negotiations with Amazon.
The strongest value in the Dow was 3M, which improved by 8.8 percent. The Bloomberg news agency reported that the conglomerate had reached a multi-billion dollar settlement with several US cities to settle allegations of water pollution by the “forever chemical” PFAS and avert a lawsuit. Similar comparisons also included Chemours (+24%), DuPont (+7.3%) and Corteva (+3.8%).
Lululemon Athletica jumped 11.3 percent. The provider of yoga clothing has more confidence in the current financial year and has raised its annual forecast after the company performed better than expected in the first quarter of the financial year.
Broadcom rose 2.8 percent. The semiconductor company beat market expectations for revenue and adjusted earnings in the fiscal second quarter, thanks to increased demand for next-generation technologies. The sales growth targeted for the third quarter was also above market estimates.
JetBlue Airways (+5.1%) and Frontier Group (+10.5%) announced that they have entered into a divestiture agreement in connection with JetBlue’s proposed acquisition of Spirit Airlines (+1.3%). The airline will sell all of Spirit’s shares in New York’s LaGuardia Airport to Frontier.
Zscaler grew revenue by nearly half in the fiscal third quarter thanks to strong demand for its cloud security services. Revenue and adjusted earnings exceeded market expectations. The outlook for the year was raised again. The IT company’s shares rose by 5.4 percent.
Tilly’s shares fell 12.6 percent after the clothing retailer forecast bigger-than-expected losses for the fiscal second quarter. Samsara, on the other hand, is up around 28 percent. The Internet of Things company reduced losses in the past quarter and significantly increased sales. The annual outlook has been raised.
The depositary receipts of the Mainz-based Biontech climbed by 3.9 percent. The biopharmaceutical company is making progress in the field of liver cancer therapy. Biontech has achieved positive results in a phase 1/2 study with its partner OncoC4.
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INDEX last +/-% absolute +/-% YTD
DJIA 33,762.76 +2.1% 701.19 +1.9%
S&P 500 4,282.37 +1.5% 61.35 +11.5%
Nasdaq Comp. 13,240.77 +1.1% 139.78 +26.5%
Nasdaq-100 14,546.64 +0.7% 105.13 +33.0%
US Bonds
Term Yield Bp to VT Yield VT +/-Bp YTD
2 years 4.50 +17.1 4.33 8.3
5 years 3.85 +15.3 3.70 -15.1
7 years 3.79 +14.2 3.65 -17.8
10 years 3.70 +10.4 3.60 -17.9
30 years 3.89 +7.1 3.82 -8.4
FOREX last +/- % Fri 7:58am Thu 5:30pm % YTD
EUR/USD 1.0708 -0.5% 1.0771 1.0737 +0.0%
EUR/JPY 149.87 +0.3% 149.61 149.10 +6.8%
EUR/CHF 0.9733 -0.1% 0.9742 0.9757 -1.7%
EUR/GBP 0.8600 +0.1% 0.8591 0.8574 -2.8%
USD/JPY 139.97 +0.8% 138.90 138.82 +6.7%
GBP/USD 1.2451 -0.6% 1.2536 1.2522 +2.9%
USD/CNH (Offshore) 7.1077 +0.0% 7.0860 7.1088 +2.6%
Bitcoin
BTC/USD 27,254.62 +1.3% 27,154.43 26,902.10 +64.2%
ROHOEL last VT-Settlem. +/- % +/- USD % YTD
WTI/Nymex 71.99 70.10 +2.7% +1.89 -9.8%
Brent/ICE 76.39 74.28 +2.8% +2.11 -8.8%
GAS VT Settlem. +/- EUR
Dutch TTF 23.53 23.10 +1.8% +0.42 -71.2%
METALS last day before +/- % +/- USD % YTD
Gold (Spot) 1,948.60 1,978.15 -1.5% -29.55 +6.8%
Silver (Spot) 23.63 23.93 -1.2% -0.30 -1.4%
Platinum (Spot) 1,003.03 1,009.83 -0.7% -6.80 -6.1%
Copper Future 3.73 3.71 +0.5% +0.02 -2.3%
YTD relative to previous day’s close
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(END) Dow Jones Newswires
June 02, 2023 16:11 ET (20:11 GMT)
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