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NEW YORK (AP) – Big tech stocks once again pushed Wall Street to record highs, even as many stocks fell on concerns about the downside of an overheated economy. Big gains in Metaplatform and Amazon pushed the S&P 500 up 1.1% on Friday. The Nasdaq Composite Index also rose 1.7%. The Dow Jones Industrial Average rose a modest 0.3%, and on Wall Street overall there were more decliners than advancers. The strong jobs report prompted traders to further push back on their expectations of when the Federal Reserve would cut its desired interest rates. In the bond market, government bond yields rose.
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NEW YORK (AP) — Big tech stocks once again pushed Wall Street to record levels on Friday, even as most stocks fell amid concerns about the downside of an overheated economy.
Big gains in Metaplatforms and Amazon, two of the most influential stocks in the market, pushed the S&P 500 up 1.3%, putting it on track to hit another all-time high. The Nasdaq Composite Index also rose 1.9% with less than an hour left in trading.
However, the Dow Jones Industrial Average, which is less tech-heavy, rose only 0.6%, or 221 points. The small-cap Russell 2000 index also fell 0.4%.
According to reports, the stock market was feeling pressure from a significant rise in yields in the bond market. US employers hired more workers Last month’s sales exceeded economists’ expectations.
While this strength is a boon for workers and avoids the risk of recession, the concern is that upward pressure on inflation could persist. That could give the Federal Reserve more time to start cutting interest rates.
Hopes for such rate cuts, which could ease pressure on the economy and goose investment prices, are a key reason why U.S. stock markets have soared to record highs. Jerome Powell Fed Chairman He said earlier this week that rate cuts were unlikely to begin as quickly as traders had hoped.
“The Fed threw cold water on the idea of a March interest rate cut less than 48 hours ago,” said Chris Larkin, managing director of trading and investments at E-Trade. Probably not,” he said. From Morgan Stanley. “This is clearly not the kind of data the Fed had in mind when it said it wanted to see more evidence that inflationary pressures are under control.”
The yield on the 10-year U.S. Treasury rose sharply after the jobs report, rising to 4.03% from 3.88% late Thursday.
Following Powell’s warning earlier this week, traders were already predicting the Fed’s first rate cut between March and May. The jobs report prompted traders to move some bets further down the calendar into June, according to data from CME Group.
In addition to the overall payroll numbers, the jobs report contained some signs of strength that was much stronger than expected. Average hourly wages for workers in January were higher than expected. The unemployment rate unexpectedly did not worsen. And the government said December employment was actually much stronger than previously reported.
The question for the stock market is whether the upside from this strength outweighs the downside. So, will more people working and a stronger economy make up for the delay and dashed expectations in lowering rates quickly and deeply?
“Significant salary increases and wage increases are nothing to fear,” said Brian Jacobsen, chief economist at Annex Wealth Management. “The Fed backed away from its argument that the labor market needs to weaken before inflation can fall sustainably.”
He pointed to a report earlier this week showing that U.S. workers are becoming more productive, potentially offsetting the impact of higher wages.
The jobs report landed on Wall Street amid a flurry of earnings reports that could have helped move the market on its own.
meta platformThe company, which owns Facebook and Instagram, soared 20.8% after it reported better-than-expected profits for its latest quarter and said it would start paying dividends to investors.
Amazon It also rose 8.1% after reporting better-than-expected profits and sales for the latest quarter.
Both companies are members of a small group of big tech stocks known as the “Magnificent Seven” and are disproportionately responsible for Wall Street’s record run. The company’s strong earnings have made growth expectations very high, which it will need to meet to justify a significant increase in the stock price.
appleanother member of the Magnificent Seven, fell 0.1% despite reporting better-than-expected profits.
Charter Communications fell 16.7%, the steepest loss in the S&P 500, after the company reported lower-than-expected earnings for its latest quarter.
Cigna and Chevron both rose after reporting stronger-than-expected profits for the final three months of 2023. Cigna rose 5.6%, the biggest gain in the S&P 500, while Chevron rose 3.2%.
Overseas, stock prices fell 1.5% in Shanghai, marking the worst week in five years. Concerns over a sluggish economic recovery and problems in the real estate industry have made the market one of the worst in the world in recent years.
The International Monetary Fund is china economy It is expected to grow at 4.6% this year and 4% in 2025, down from 5.2% last year.
Elsewhere in Asia and Europe, stocks were mixed.
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AP Business writers Yuri Kageyama and Matt Ott contributed.
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