Stocks rally, bond yields retreat amid mixed jobs data: market analysis

Wall Street reverses the trend

In a notable turnaround, Wall Street witnessed stocks gain ground while bond yields retreated following the release of a mixed jobs report. The data had a limited impact on investors’ outlook on Federal Reserve policy, leaving market sentiment in a state of flux.

Mixed signals for bulls and bears

Labor market figures presented a mixed picture: payrolls grew at a slower pace than expected, while wages exceeded forecasts. With 47 days until the Federal Reserve’s next decision, the swaps market indicates a strong belief that the central bank is nearing the end of its rate raising cycle.

Technology leads the charge

Risk-on sentiment prevailed on Friday, prompting the S&P 500 to halt a three-day slide, while the tech-heavy Nasdaq 100 rose nearly 1%. Amazon.com Inc. attracted attention with an impressive 10% rise thanks to a bullish revenue forecast. In contrast, Apple Inc. fell below the all-time market capitalization mark of $3 trillion due to disappointing prospects.

Bond market relaxes

In the bond market, investors saw some easing of this week’s turbulence that had rocked markets around the world. Treasuries rose across the curve, causing 10-year yields to fall from their highest since November. At the same time, the dollar fell against its major developed market counterparts.

Key figures from the employment report

According to the Bureau of Labor Statistics report, nonfarm payrolls increased by 187,000 last month, following a similar increase in June. The unemployment rate fell to 3.5%. Average hourly earnings increased 0.4% compared to June and 4.4% compared to the previous year, exceeding expectations.

Analyst Perspectives

Several prominent analysts weighed in on the jobs report and its implications for the Federal Reserve’s monetary policy:

• Edward Moya, senior market analyst at Oanda, believes the report keeps alive “hopes for a soft landing.”

• Seema Shah, chief global strategist at Principal Asset Management, believes the report does not offer clarity on the Fed’s dilemma.

• Oscar Muñoz, chief US macroeconomic strategist at TD Securities, expects the Federal Reserve to pause in September.

• David Kelly, chief global market strategist at JP Morgan Asset Management, says the July and August inflation reports will have a more significant impact on further Fed tightening decisions.

• Tiffany Wilding, CEO and economist at Pacific Investment Management Co., believes the report doesn’t change her view of the slowly slowing labor market.

Corporate Highlights

Several corporations made headlines for their market performance:

• Booking Holdings Inc. reported revenue that exceeded analyst estimates, reflecting strong travel demand.

• DraftKings Inc. posted sales that beat expectations and raised its full-year forecast.

• Atlassian Corp. delivered a reassuring forecast for the new year, quelling concerns about a slowdown in spending on Internet technology.

• Tupperware Brands Corp. won after reaching an agreement with lenders to restructure existing debt obligations.

• Nikola Corp.’s announcement of a new CEO sent shares of the electric truck maker tumbling.

• Icahn Enterprises LP reduced its quarterly payments and pledged to address complaints raised by short seller Hindenburg Research.

• Block Inc., Jack Dorsey’s payments company, faced market disappointment after results fell short of expectations.

Market movements

At 1:11 p.m. New York time:

• The S&P 500 rose 0.7%

• Nasdaq 100 rose 0.9%

• The Dow Jones Industrial Average rose 0.7%

• The MSCI World index rose 0.8%

• Bloomberg Dollar Spot Index fell 0.6%

• The euro rose 0.8% to $1.1036

• The pound rose 0.6% to $1.2782.

• The Japanese yen rose 0.5% to 141.87 per dollar

• Bitcoin fell 0.1% to $29,252.85

• Ether rose 0.1% to $1,845.34.

• The 10-year Treasury yield fell 10 basis points to 4.07%

• The 10-year German bond yield fell four basis points to 2.56%

• The UK 10-year yield fell nine basis points to 4.38%

• West Texas Intermediate crude rose 1.9% to $83.10 a barrel

• Gold futures rose 0.4% to $1,977.20 an ounce

Note: Data and market movements are as of the specified time and are subject to change as market conditions evolve.

Also read: Fitch downgrades US credit rating, causing global stock and Treasury yields to fall: Live market updates