Dow Jones Today: Stock Gains Moderate After Post-Jobs-Report Surge
· InvestopediaMajor U.S. stock indexes were higher late Friday morning, though down from the early-session gains that came after a highly anticipated labor market report showed that U.S. employers added far more jobs than expected in September.
The Dow Jones Industrial Average was up fractionally, while the S&P 500 and Nasdaq Composite gained 0.1% and 0.3%, respectively. Major indexes have gotten off to a bumpy start in October after closing last month at record high levels, as investors look for continued signs that the economy is on sound footing, while concerns about growing tensions in the Middle East have weighed on sentiment.
The report Friday from the Labor Department said that 254,000 jobs were added last month, about 100,000 more than the median estimate from economists. The unemployment rate was 4.1% in September, slightly lower than expected. The data underscores the resilience of the labor market, which has shown signs of weakness in recent months.
Federal Reserve officials have said they are increasingly focused on the labor market now that inflation has moderated. The Fed cut its benchmark interest rate last month for the first time in four years and has indicated that more easing is likely, though economic data will drive decisions on how fast and deep subsequent cuts will be. Friday's data could relieve pressure on the Fed to make big rate cuts in the coming months.
News that dockworkers late Thursday agreed to suspend a massive strike, which had closed ports from Maine to Texas this week, also provided a boost to sentiment Friday. There had been concerns that the work stoppage could could significantly disrupt supply chains, sparking inflation and harming the labor market.
Mega-cap technology stocks were mixed in recent trading. Meta Platforms (META) rose slightly to another record high, while Nvidia (NVDA) also moved higher after surging more than 3% yesterday amid optimism about demand for its AI chips. Amazon (AMZN) also rose, but Microsoft (MSFT), Apple (AAPL) and Alphabet (GOOGL) were losing ground.
U.S.-traded shares of Chinese stocks were also rising, extending big gains that were spurred last week by the announcement of wide-ranging stimulus measures by Chinese authorities. The iShares MSCI China ETF (MCHI) rose nearly 3% and is up about 30% since the first batch of measures was announced early last week.
Crude oil futures were up about 1% after surging more than 5% yesterday amid concerns that a growing conflict in the Middle East could cut into supply.
Gold futures were up slightly to around $2,680 per ounce, while bitcoin rose about 1% to trade around $61,500.
Rivian Tumbles as EV Maker Slashes Production Outlook
12 minutes ago
Rivian Automotive (RIVN) shares sank Friday as the electric vehicle maker missed third-quarter delivery estimates and slashed its full-year production outlook because of difficulties in getting a part.
Rivian said it built 13,157 EVs in the quarter, and delivered 10,018. Analysts surveyed by Visible Alpha were looking for 12,08O deliveries. The company's latest news extended a recent slide in a stock that has fallen from levels seen this summer following an investment from Volkswagen.
The company cut its 2024 production estimate because of a supply shortage of a component used to build its R1S SUV and RCV commercial van. It added that the issue began in the third quarter, and “has become more acute in recent weeks and continues.”
Rivian now anticipates it will manufacture 47,000 to 49,000 EVs this year, down from its previous forecast of 57,000.
Rivian shares were down 7% in recent trading and have lost more than half their value since the start of the year.
Frontier, JetBlue Soar on Report of Spirit Bankruptcy Talks
45 minutes ago
Shares of Frontier Group Holdings (ULCC) and JetBlue Airways (JBLU) took off Friday on a report that discount airline rival Spirit Airlines (SAVE) is considering a bankruptcy filing. Spirit shares plunged 25% soon after markets opened.
The Wall Street Journal reported that Spirit is in discussions with bondholders and other creditors about possible terms for a Chapter 11 filing, although it noted such a filing would not be imminent. The paper said that Spirit is also looking at restructuring its balance sheet through an out-of-court deal, although the focus was on the bankruptcy negotiations.
Spirit has faced losses and falling revenue on tougher competition from both low-cost rivals and bigger airlines. It failed in its $6.6 billion plan to merge with Frontier in 2022. Following that, Spirit agreed to a takeover by JetBlue, only to see that fall through this year as regulators challenged it over antitrust concerns.
Frontier shares were up 21% in recent trading, while JetBlue gained 17%.
Treasury Yields Rise, Rate Cut Expectations Fall
1 hr 57 min ago
Treasury yields jumped and the market’s expectations for interest rate cuts plummeted on Friday morning after the surprisingly strong jobs report dispelled some fears that the Federal Reserve needs to come to the rescue of a weakening labor market.
Market participants slashed their rate cut forecasts in the wake of the report. The odds of the Fed cutting rates by 50 basis points, or half a percentage point, at its next meeting in November slumped from 30% to about 5%, according to federal funds futures trading data. Market participants are now pricing in less than a 30% chance that the Fed will cut its benchmark rate by a total of 75 basis points by year's end, which compares with the 56% odds that were priced in yesterday.
The readjusted expectations aligned Wall Street’s view with that of Fed officials, who in their quarterly economic projections forecast making modest rate cuts at each of its two remaining meetings this year.
Treasury yields soared in the wake of the report, with the 10-year yield jumping about 10 basis points to 3.95%, its highest level since mid-August. The yield on the 2-year Treasury, which is heavily influenced by the market’s expectations for the Fed’s benchmark interest rate, leapt 15 basis points to 3.87%, a one month high.
Major Index Stock Futures Higher Ahead of Jobs Data
3 hr 51 min ago
Futures tied to the Dow Jones Industrial Average were up 0.1%.
S&P 500 futures were up 0.3%.
Nasdaq 100 futures were up 0.4%.