Day: June 2, 2023

(C) Reuters

Investing.com — The S&P 500 surged Friday as the measure aimed at lifting the debt ceiling passed the final hurdle to put the U.S. on track to avoid a default, while a blowout jobs report also stoked bullish bets on stocks.

The S&P 500 was up 1.6%, the Dow Jones Industrial Average gained 2.2%, or 731 points, the Nasdaq gained 1.2%.

The U.S. economy created 339,000 new jobs in May, well above the 180,000 expected, though the unemployment rate rose more than expected to 3.7% and wage growth climbed less than expected.

Following the better-than-expected job gains in May, Morgan Stanley said they continued to “see the Fed on hold at the June meeting, and think the bar will be too high for the Fed to resume hiking.”

On Capitol Hill, meanwhile, a measure to lift the debt limit and cut government spending was passed in the Senate, a key final hurdle for the legislative measure, which now moves onto President Biden’s desk to be signed into law and averts an unprecedented default.

Energy stocks led the move higher for the second day in a row as oil prices gained on speculation that OPEC and its allies, or OPEC+, could announce a cut at its meeting in Vienna on Sunday.

“The decision to hold an in-person meeting in Vienna one month before everyone returns for the OPEC Seminar does raise the prospect that the group could decide to do a deeper cut to provide further support to the market as it continues to contend with broader macro concerns,” RBC said in a note.

Materials were also in the ascendency, driven by an 8% surge in Dupont De Nemours Inc (NYSE:DD) after the chemical company — together with Chemours Co (NYSE:CC) and Corteva Inc (NYSE:CTVA) — reached an agreement to settle allegations that they contaminated public water systems with toxic perfluoroalkyl and polyfluoroalkyl, substances (PFAS), or so-called forever chemicals.

Tech lagged the gains in the broader market, though remains set to end the week with strong gains following the AI-related surge in chip stocks this week including Nvidia (NASDAQ:NVDA).

Broadcom Inc (NASDAQ:AVGO) rose nearly 3% after reporting quarterly results that topped estimates, and saying that it expects more than a quarter of fiscal 2024 revenue to be driven by generative AI models such as ChatGPT.

Ahead its developer conference that kicks off on Monday, Apple Inc (NASDAQ:AAPL) was slightly higher after Morgan Stanley hiked its price on the target to $190 from $185 on optimism that the tech giant will launch its new virtual reality headset that will boost growth.

“Our supply chain checks tell us Reality Pro general availability will likely come in the Dec ’23 quarter, and that builds will ramp from 300,000 to 500,000 in calendar 2023, to 3M to 4M by 2025,” it added.

Elsewhere on the earnings front, Lululemon Athletica (NASDAQ:LULU) lifted its guidance after reporting quarterly results that topped estimates, sending its shares up 12%.

SentinelOne Inc (NYSE:S) slumped 36% after the cybersecurity company cut its annual sales outlook after reporting quarterly revenue that fell short of Wall Street estimates amid a weaker macroeconomic backdrop.

(C) Reuters. FILE PHOTO: An electronic board shows stock indexes at the Lujiazui financial district in Shanghai, China, March 21, 2023. REUTERS/Aly Song

By Chibuike Oguh

NEW YORK (Reuters) -Global shares and U.S. Treasury yields rose on Friday following stronger-than-expected job growth data that raised investor expectations that the Federal Reserve could retain its interest rate hikes.

Labor Department data showed on Friday that the U.S. economy added 339,000 jobs last month, significantly higher than most estimates and suggesting tighter labor market conditions which might prompt a Fed rate hike.

The market mood was also supported by the U.S. Senate passing bipartisan legislation on Thursday that lifted the federal government’s $31.4 trillion debt ceiling and averted what would have been a first-ever default. The bill, which had been passed by the House of Representatives on Wednesday, heads to President Joe Biden, who is expected to sign it.

“We are of the view that the Fed will keep interest rates steady until sometime next year,” said Tom Plumb, portfolio manager at Plumb Balanced Fund, adding that the U.S. economy is much stronger than most people realize.

The MSCI world equity index, which tracks shares in almost 50 countries, was up 1.52%. The pan-European STOXX 600 index (.STOXX) rose 1.21%.

On Wall Street, all three main indexes ended higher, led by gains in financials, industrials, consumer discretionary, technology and healthcare stocks.

The Dow Jones Industrial Average rose 2.12% to 33,762.76, the S&P 500 gained 1.45% to 4,282.37 and the Nasdaq Composite added 1.07% to 13,240.77.

U.S. Treasury yields were higher as investors bet on a possible increase in rates although many believe the Fed is likely to stick with a pause in hikes when it meets later this month. Benchmark 10-year notes were up at 3.695%, while yields on the more rate-sensitive 2-year notes rose to 4.509%.

The U.S. dollar edged higher in choppy trading after the strong job growth data. The dollar index rose 0.483%, with the euro dropping 0.5% to $1.0707.

Oil prices gained more than 2% on Friday as attention turned to a meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies this weekend.

Brent futures rose 2.5% to settle at $76.13 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 2.3% to $71.74.

Gold prices slipped as the U.S. dollar rose. Spot gold dropped 1.5% to $1,948.11 an ounce, while U.S. gold futures fell 1.55% to $1,947.40 an ounce.

(C) Reuters.

Investing.com — The Dow racked up gains Friday, wrapping up a weekly win as investors cheered strong labor market data, and news the debt-ceiling bill could likely be signed into law as soon as Saturday to avert a U.S. default.

The Dow Jones Industrial Average gained 2.1%, or 701 points, the Nasdaq gained 1.1% to close at 52-week highs, and the S&P 500 was up 1.4%.

The U.S. economy created 339,000 new jobs in May, well above the 180,000 expected, though the unemployment rate rose more than expected to 3.7% and wage growth climbed less than expected.

Following the better-than-expected job gains in May, Morgan Stanley said they continued to “see the Fed on hold at the June meeting, and think the bar will be too high for the Fed to resume hiking.”

On Capitol Hill, meanwhile, a measure to lift the debt limit and cut government spending was passed in the Senate, a key final hurdle for the legislative measure, which now moves onto President Biden’s desk to be signed into law and averts an unprecedented default.

[W]e’re going to work very quickly with them to get this done to make sure we can sign it, hopefully as soon as tomorrow,” Press Secretary Karine Jean-Pierre said Friday, responding to questions about when Biden might sign the legislative measure.

Energy stocks led the move higher for the second day in a row as oil prices gained on speculation that OPEC and its allies, or OPEC+, could announce a cut at its meeting in Vienna on Sunday.

“The decision to hold an in-person meeting in Vienna one month before everyone returns for the OPEC Seminar does raise the prospect that the group could decide to do a deeper cut to provide further support to the market as it continues to contend with broader macro concerns,” RBC said in a note.

Materials were also in the ascendency, driven by a 7% surge in Dupont De Nemours Inc (NYSE:DD) after the chemical company — together with Chemours Co (NYSE:CC) and Corteva Inc (NYSE:CTVA) — reached an agreement to settle allegations that they contaminated public water systems with toxic perfluoroalkyl and polyfluoroalkyl, substances (PFAS), or so-called forever chemicals.

Tech lagged the gains in the broader market, though remains set to end the week with strong gains following the AI-related surge in chip stocks this week including Nvidia (NASDAQ:NVDA).

Broadcom Inc (NASDAQ:AVGO) rose nearly 3% after reporting quarterly results that topped estimates, and saying that it expects more than a quarter of fiscal 2024 revenue to be driven by generative AI models such as ChatGPT.

Ahead of its developer conference that kicks off on Monday, Apple Inc (NASDAQ:AAPL) was slightly higher after Morgan Stanley hiked its price on the target to $190 from $185 on optimism that the tech giant will launch its new virtual reality headset that will boost growth.

“Our supply chain checks tell us Reality Pro general availability will likely come in the Dec ’23 quarter, and that builds will ramp from 300,000 to 500,000 in calendar 2023, to 3M to 4M by 2025,” it added.

Elsewhere on the earnings front, Lululemon Athletica (NASDAQ:LULU) lifted its guidance after reporting quarterly results that topped estimates, sending its shares up almost 12%.

SentinelOne Inc (NYSE:S) slumped 35% after the cybersecurity company cut its annual sales outlook after reporting quarterly revenue that fell short of Wall Street estimates amid a weaker macroeconomic backdrop.

(C) Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 30, 2023. REUTERS/Brendan McDermid

By Herbert Lash and Shreyashi Sanyal

(Reuters) -U.S. stocks closed higher on Friday after a labor market report showing moderating wage growth in May indicated the Federal Reserve may skip a rate hike in two weeks, while investors welcomed a Washington deal that avoided a catastrophic debt default.

The tech-heavy Nasdaq index surged to a 13-month intraday high and posted its sixth-straight week of gains that marked its best winning streak since January 2020.

U.S. job growth accelerated in May but a surge in the unemployment rate to a seven-month high of 3.7% as more people looking for employment indicated labor market conditions were easing, the Labor Department said.

The jump in the unemployment rate from a 53-year low of 3.4% in April reflected a drop in household employment and a rise in the overall workforce. A bigger labor pool is easing pressure on businesses to raise wages and helping decelerate inflation.

“While it appears to be a hot number on the actual number of people employed, the wage rate is not increasing as fast,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh. “That is a softening effect and is this the mythical soft landing? Looks like that.”

The data brought relief to investors who mostly expect the Fed to pause hiking rates at its policy meeting on June 13-14. It would be the first halt since the Fed started its aggressive anti-inflation policy tightening more than a year ago.

But some pointed to the much hotter-than-expected jobs data as a sign the Fed still has not yet tamed inflation.

“Our view is and has been that the market is completely wrong on assessing what the Federal Reserve is doing,” said Phil Orlando, chief equity strategist at Federated Hermes (NYSE:FHI) in New York.

“The market’s perception is that this economy was going to cool, inflation was going to collapse and the Fed was going to turn around and start cutting interest rates. That’s wrong.”

Fed funds futures showed a 71.3% probability that the Fed will hold rates steady in two weeks, down from 79.6% on Thursday, according to CME Group’s (NASDAQ:CME) FedWatch Tool.

Markets now await data on key consumer prices a day before the Fed’s rate decision in two weeks.

The Senate passing a bill late on Thursday to lift the government’s $31.4 trillion debt ceiling avoided what would have been a catastrophic, first-ever default.

Passage of the vote eased investor concerns as Wall Street’s fear gauge, the CBOE volatility index, fell to its lowest since November 2021, down 1.1 points at 14.6 points.

The Dow Jones Industrial Average rose 701.19 points, or 2.12%, to 33,762.76, the S&P 500 gained 61.35 points, or 1.45%, to 4,282.37 and the Nasdaq Composite added 139.78 points, or 1.07%, to 13,240.77.

For the week, the S&P 500 rose 1.82%, the Dow added 2.02% and the Nasdaq gained 2.04%

Volume on U.S. exchanges was 11.05 billion shares, compared with about 10.58 billion average for the full session over the last 20 trading days.

Shares of Verizon Communications Inc (NYSE:VZ), AT&T Inc (NYSE:T) and T-Mobile US (NASDAQ:TMUS) Inc declined after a report said Amazon.com Inc (NASDAQ:AMZN) was in talks with the U.S. telecoms to offer low-cost wireless services to its Prime members.

Verizon slid 3.2%, while AT&T and T-Mobile declined 3.8% and 5.6%, respectively; Amazon gained 1.2%.

All 11 S&P 500 sectors advanced, with the materials index leading, up 3.4%, and the consumer discretionary sector, housing Amazon, close behind, rising 2.2%.

Nvidia (NASDAQ:NVDA) Corp slid 1.1% for a second day of declines after briefly entering on Wednesday the elite club of megacap stocks valued at $1 trillion or more on hopes artificial intelligence will deliver significant future returns.

But Nvidia’s almost 170% rise year to date highlights investors face of a market dominated by the out-performance of megacaps while most other companies tread water.

“Nobody’s really explained to me how they’re going to make any money from it,” said Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management in Punta Gorda, Florida. “A company like Nvidia going up so much in such a short period of time, that doesn’t make any rational sense.”

Advancing issues outnumbered declining ones on the NYSE by a 4.75-to-1 ratio; on Nasdaq, a 2.73-to-1 ratio favored advancers.

The S&P 500 posted 15 new 52-week highs and two new lows; the Nasdaq Composite recorded 74 new highs and 40 new lows.