Stocks experienced a significant surge on Friday as investors analyzed a slowdown in job growth, which could potentially signal that the Federal Reserve is ending its rate-hiking campaign. The Dow Jones Industrial Average rose by 0.5% or 160 points, while the S&P 500 and Nasdaq Composite both saw gains of 0.6%. The US economy added 150,000 jobs in October, falling short of the expected 180,000. The Bureau of Labor Statistics attributed the lower-than-expected numbers to strikes in the auto industry. The unemployment rate ticked slightly higher to 3.9%. The labor market’s strength is a crucial factor for policymakers at the Federal Reserve, and signs of a slowing economy may lead to a decision to postpone any further rate hikes this year.
Tech stocks experienced a recovery after a morning of losses caused by underwhelming results from Apple’s quarterly report. Although Apple’s earnings beat estimates, the company expressed caution regarding its outlook for growth. It expects sales of iPads and wearables to decrease significantly, leading investors to consider the potential impact on consumer resilience and how this aligns with the Fed’s assessment of the dampening effect of its tightening policies on the economy.
Carvana, an online used car platform, saw its stock prices rise more than 4% after reporting a surprise profit in the last quarter. Despite a decline in the number of units sold year-over-year, Carvana managed to post adjusted earnings of $3.60 per share, surpassing the expected loss of 78 cents. Revenue matched expectations at $2.77 billion. The company experienced a significant increase in total gross profit per unit, which jumped 70% year-over-year to $5,952. Although analysts at DA Davison maintained a neutral rating on the stock, they lowered their price target due to lower unit sales compared to the previous year. Carvana expects a decline in retail units sold driven primarily by industry and seasonal patterns. The company has prioritized achieving profitability at the expense of growth by laying off workers and reducing costs.
Wall Street opened on a positive note as the market interpreted the slower job growth as an indication that the Fed will pause its rate hikes. The S&P 500 rose by 0.7%, the Dow Jones Industrial Average increased by 0.5%, and the Nasdaq Composite gained 0.6%.
Stock futures experienced a spike after the unexpected slowdown in job growth. Dow Jones Industrial Average futures rose by 0.50% or 169 points, S&P 500 futures increased by 0.52%, and Nasdaq 100 futures added 0.38%.
According to the Bureau of Labor Statistics, the October labor report revealed that 150,000 nonfarm payrolls were added to the market, falling short of the consensus estimate of 180,000. This signifies a decrease in growth compared to the 334,000 in September. The unemployment rate rose slightly to 3.9%.
Tech stocks faced some challenges as investors focused on Apple’s cautious outlook for sales and awaited the October US jobs report. Nasdaq 100 futures fell by 0.19%, S&P 500 futures dropped by 0.06%, and Dow Jones Industrial Average futures were down by 0.03% or 29 points.
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