Stock market indexes traded lower on Friday after Hamley’s nonfarm payrolls report beat expectations by a country mile. A weak PC component guide from a hard drive maker Western Digital ( WDC ) added to the pressure on tech stocks, with well-known names posting heavy losses.
X
The Dow Jones Industrial Average was down 0.3% after lunch, while the S&P 500 was down 0.6%. The Russell 2000 small-cap index is bucking the downward spiral, gaining 0.3%. The Nasdaq composite was down 0.9%.
The Nasdaq was down 9% from Thursday, while the NYSE was near yesterday’s close.
Overview of the US stock market today |
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|---|---|---|---|---|
| Index | sign | Price | Profit/Loss | % change |
| Dow Jones | ($0) | 32641.71 | -85.11 | -0.26 |
| S&P 500 | (0S&P5) | 4126.07 | -25.87 | -0.62 |
| Nasdaq | (0NDQC) | 12601.31 | -119.27 | -0.94 |
| Russell 2000 | (IWM) | 189.99 | +0.64 | +0.34 |
| IBD 50 | (FTA) | 29.19 | +0.26 | +0.90 |
Last update: 12:30 PM ET 8/5/2022 |
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Bonds at all maturities sold off, pushing the 10-year Treasury yield to 2.87 percent. Crude oil fell sharply as gold traded, with the yellow metal down 1% to $1,789. Inflation-sensitive copper rose 1.8% to $3.54.
Western Digital ( WDC ) is trading 5.7% lower after warning that hard drive sales are declining at an accelerated rate compared to pre-pandemic levels. Intel (INTC) and other PC parts plays sold on news.
Chip stocks also traded lower, with fears of supply disruptions from Taiwan adding to concerns about inflation and hardware sales.
Commercial banks rallied after the jobs report on hopes that steady demand and rising prices would lead to strong profits. The body of the dau JPMorgan Chase ( JPM ) jumped nearly 3%, while the SPDR S&P Bank ETF ( KBE ) traded 0.5% higher.
July’s employment opportunities are more than moderate expectations
A half-dozen Fed governors warned stock market participants this week about Alan Greenspan’s “rational euphoria” in 2022. The comments made perfect sense after the expectation that off-farm payrolls would add 250,00 jobs. Instead, nonfarm payrolls rose to 528,000. A hot labor market fuels consumer and wage demand, which invariably translates into higher inflation.
Hourly earnings declined 0.3% monthly consensus, at a 5.2% annual rate. Bond yields are higher on the news amid concerns that much higher rates will be needed to contain inflation.
Chairman Jerome Powell made it clear last week that interest rates would need to ease to return to historic levels. If not, the Fed will have no choice but to act more aggressively on interest rates.
The odds for a 75 basis point increase rose to 65.5% in September, up from 34% a day earlier. The April 2023 federal funds rate is expected to rise 3.6%, the biggest increase since last week’s 3.06% post-Fed publication.
Friday stock market highlights
Synopses ( SNPS ), #16 on the IBD 50, rallied within 2% of a 377.70 buy point on a seven-month double-bottom basis. The stock carries a high 98 composite rating and 97 EPS rating.
The company has beaten quarterly estimates by double-digit percentages in each of the past three quarters, and annualized EPS has risen for six consecutive years. Look for that aggressive streak to continue, posting EPS growth of 24% and 14% in 2023 and 2024, respectively.
Adalam Global Education ( ATGE ), #48 on the IBD 50, broke the trend, falling below its 21-day exponential moving average as shares fell 3.5%.
AMN Health Care (AMN), #39 on the IBD 50, rose 7% after reporting a 102% gain per share. The stock is forming a cup-hand pattern with a buy point of 125.04, although the handle is deeper than usual.
The stock is trading 7% below the pivot after Friday’s high.
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