U.S. investors look to Europe for next leg of stock gains
The The S&P 500 and the Dow Jones Industrials hit record highs on Friday, while the technology-heavy Nasdaq index jumped 1% after weak U.S. jobs data eased worries about the Federal Reserve reducing its massive stimulus program anytime soon.
The Labor Department’s closely watched employment report showed U.S. employers hired far fewer workers than expected in April, with nonfarm payrolls increasing by only 266,000 jobs last month after rising by 770,000 in March.
Economists polled by Reuters had forecast payrolls advancing by nearly 1 million jobs. Data also showed unemployment rate rose to 6.1% in April from 6.0% in March.
Highly valued stocks such as Microsoft Corp (MSFT.O), Apple Inc (AAPL.O) and Facebook Inc (FB.O) rose between 0.4% and 1.7%.Analysts expect first-quarter earnings for S&P 500 firms to have grown 30.9% from a year ago, according to Refinitiv IBES data.
The MSCI’s benchmark for global equity markets (.MIWD00000PUS) also hit an all-time high, while European equities (.STOXX) extended their record run.
“One number doesn’t make a trend, but it takes some of the heat off the economy overheating and inflation moving dramatically higher,” said Larry Adam, chief investment officer at Raymond James.
The U.S. economy is poised to boom as consumers hold $2 trillion in savings in excess of what they held before the pandemic, said Doug Peta, chief U.S. investment strategist at BCA Research, adding markets are in pause mode.
“If indeed we do keep grinding higher that would be healthy, that would suggest that the grinding higher is sustainable,” Peta said. “The pullbacks along the way are healthy.”
By 1:44 p.m. ET, the Dow Jones Industrial Average fell 150.4 points, or 0.44%, to 34,050.27, the S&P 500 lost 24.91 points, or 0.60%, to 4,160.56 and the Nasdaq Composite dropped 148.69 points, or 1.06%, to 13,903.66.
Coca-Cola Co rose 0.35% after the beverage maker trounced estimates for quarterly profit and revenue, benefiting from the easing of pandemic curbs and wide vaccine rollouts.
International Business Machines Corp, another blue-chip company, slipped about 0.22% ahead of its results after market close.
“The market has had a huge jump to the upside so it needs to take a little bit of rest,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“For now it’s just a little bit of profit taking as traders await results from big tech names on Wall Street.”
A recent retreat in benchmark 10-year Treasury yields from 14-month highs has renewed interest in highly valued technology stocks, while a string of strong economic data has also helped push the S&P 500 and the Dow to record levels.
The S&P 500 has gained the past four weeks, its longest winning streak since August 2020.
GameStop Corp jumped 6.41% on the announcement of its CEO’s resignation.
Crypto stocks including miners Riot Blockchain and Marathon Digital each slumped about 11% each as bitcoin took a hammering.