U.S. Stocks Buoyed by Strong Employment Report
03-May-19 16:15 ET
Dow +197.16 at 26504.95, Nasdaq +127.22 at 8163.98, S&P +28.12 at 2945.64
briefing.com
[BRIEFING.COM] The S&P 500 advanced 1.0% on Friday, as a strong employment report underpinned a move back to near all-time highs. Friday's gains helped the benchmark index finish the week higher by 0.2%.
The Nasdaq Composite (+1.6%) set a new closing record, and it also finished the week higher by 0.2%. The Russell 2000 (+2.0%) outperformed and finished the week with a gain of 1.4%. The Dow Jones Industrial Average (+0.8%) reduced its weekly loss to 0.1%.
Once again, the April Employment Situation report pointed to strong headline growth and subdued inflationary pressure stemming from rising wages. Nonfarm payrolls increased by 263,000 while average hourly earnings were up just 0.2%, leaving them up 3.2% yr/yr and unchanged from the March report.
The robust jobs data fueled a broad-based rally in U.S. equities, abated the selling in the Treasury market, and contributed to a noticeable decline in the CBOE Volatility Index (12.95, -1.46, -10.1%).
All 11 of the S&P 500 sectors finished higher with gains ranging from 0.7% (utilities) to 1.4% (consumer discretionary).
Amazon (AMZN 1962.46, +61.64) rose 3.2% after Warren Buffet said Berkshire Hathaway (BRK.B 218.60, +2.67, +1.2%) has been buying shares of the company. Its outperformance contributed to the leadership of the consumer discretionary sector.
The S&P 500 energy sector (+0.8%) was a strong performer for most of the session as oil prices ($61.93/bbl, +$0.16, +0.3%) stabilized, but the group succumbed to selling interest into close. The energy space had fallen in tandem with oil this week, finishing the week with a steep loss of 3.3%.
U.S. Treasuries ended the week on a higher note, pushing yields slightly lower. The 2-yr yield and the 10-yr yield declined two basis points each to 2.32% and 2.53%, respectively. The U.S. Dollar Index lost 0.4% to 97.49.
Reviewing Friday's economic data, which included the Employment Situation Report for April, the ISM Non-Manufacturing Index for April, and the Advance reports for International Trade in Goods, Wholesale Inventories, and Retail Inventories for March.
- The Employment Situation report pointed to strong headline growth and subdued inflationary pressure stemming from rising wages. Nonfarm payrolls increased by 263,000 while average hourly earnings were up just 0.2%, leaving them up 3.2% yr/yr, unchanged from what was seen in the March report.
- The April report should support the Fed's case for staying on its current policy path.
- The ISM Non-Manufacturing Index (NMI) for April decreased to 55.5% (Briefing.com consensus 57.4%) from 56.1% in March. The dividing line between expansion and contraction is 50.0%. The April reading is the lowest level for the index since August 2017.
- The key takeaway from the report is that all index components remained above 50.0, indicating continued growth, though at a slower pace. According to the ISM, the past relationship between the NMI and the overall economy indicates the NMI for April corresponds to a 2.4% increase in real GDP on an annualized basis.
- The Advance report for International Trade in Goods for March showed a deficit of $71.5 billion. The Advance report for Wholesale Inventories for March showed a decrease of 0.3%, and the Advance report for Retail Inventories for March showed no change in retail inventories.
There is no economic data on the calendar for Monday.
- Nasdaq Composite +23.0% YTD
- Russell 2000 +19.7% YTD
- S&P 500 +17.5% YTD
- Dow Jones Industrial Average +13.6% YTD
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