Stock markets around the world experienced mixed reactions as the US labor market showed signs of cooling and corporate earnings remained positive. The latest US non-farm payrolls (NFP) figures revealed that hiring in the US came in at 175,000 in April, down from a revised March figure of 315,000. Additionally, the unemployment rate rose to 3.9%, higher than the expected 3.8%. The weaker-than-expected job growth and rising unemployment have raised hopes of interest-rate cuts by the Federal Reserve [e944813c] [78f97bab].
The release of the US jobs data led to a slide in the value of the US dollar against its main rivals. US stocks initially responded positively, with a jump of over 1% at the start of trading. However, the market reaction was mixed, and the index averages have been volatile throughout the week. The S&P 500 and the Nasdaq Composite both saw gains, with the S&P 500 up about 1% and the Nasdaq Composite up about 1.8% at the time of writing. The tech sector has outperformed its counterparts in the US market [48ff78f8] [78f97bab].
In addition to the US labor market cooling, corporate earnings for the S&P 500 Index have been positive so far. More than 340 companies, or 68% of the S&P 500, have reported their first-quarter earnings. Overall, 80% of these companies are beating estimates. The positive earnings reports have contributed to the mixed market reactions, with some investors focusing on the strength of corporate earnings while others are concerned about the cooling labor market and the possibility of interest-rate cuts [78f97bab].
Despite the mixed market reactions, the Federal Reserve has maintained its higher-for-longer stance on interest rates. The Federal Open Market Committee meeting resulted in a decision to reduce the number of bonds they planned to sell into the debt markets, indicating a potential shift in their monetary policy. The weaker macroeconomic data, including the cooling labor market, may prompt the Federal Reserve to cut interest rates sooner than expected [78f97bab].
Overall, the US labor market's cooling and the positive corporate earnings have created a mixed market environment. Investors are weighing the potential impact of interest-rate cuts by the Federal Reserve against the strength of corporate earnings. The market reaction has been volatile, with the index averages fluctuating throughout the week. The tech sector has outperformed its counterparts in the US market, contributing to the mixed reactions. The Federal Reserve's decision to reduce the number of bonds they planned to sell into the debt markets indicates a potential shift in their monetary policy [e944813c] [48ff78f8] [78f97bab].