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The Dow Jones climbed more than 400 points on Friday on hopes the Federal Reserve could start cutting interest rates soon after a weaker-than-expected April jobs report. The Dow Jones Industrial Average rose 410 points (1.1%). The S&P500 rose one percent while the Nasdaq Composite gained 1.7%. Friday's non-farm payrolls report showed that 1.75 lakh people gained jobs in April, less than the 2.40 lakh jobs expected in a survey of Dow Jones economists. The unemployment rate rose to 3.9% from 3.8% last month, according to the Bureau of Labor Statistics. Wages data also came in below expectations, which is an encouraging sign for inflation.
Emily Rowland, co-chief investment strategist at John Hancock Investment Management, said investors' fears that the economy is overheating or slowing down are reviving expectations of a rate cut. That's why interest rates are falling, bonds are rising and equity markets are rising. Bad news for the job market means the Fed may start cutting interest rates later this year. Traders are expecting another rate cut by the end of the year after weaker-than-expected jobs growth and moderate wage growth in April. During the Federal Reserve meeting on Wednesday, Chairman Jerome Powell said the central bank is prepared to take action if the unemployment rate remains high. We are also prepared to respond to unexpected weakness in the labor market.
Service sector activity declined for the first time in a year
According to a report by the Institute for Supply Management (ISM), service sector activity in the US has declined for the first time since December 2022. ISM Service Index from March
The Dow fell 2 points to 49.4, below the Dow Jones estimate of fifty-two points.
Amgen, Apple shares rise, Cloudfare falls
Amgen shares jumped 12% while Apple jumped more than seven percent. After Apple's announcement of $110 billion share buyback, the company's shares surged. Cloudflare shares, on the other hand, saw a decline of 11%.
Amgen's best performance in 15 years
Shares of American multinational biopharmaceutical company Amgen rose 12% on Friday, its best performance in 15 years. Amgen shares rose on strong quarterly results and an encouraging update on the company's obesity drug. Earlier on July 8, 2009, a rise of 14% was seen in the company's shares.