Around 4:20 p.m., the Dow Jones fell by only 0.02%, the S&P by 0.03%, the Nasdaq by 0.04% instead of -1.30% a few minutes earlier.
The New York Stock Exchange came back close to equilibrium shortly after the opening after having plunged into the red on Friday, reacting to the very strong job creations in the United States which raised fears of an even stricter attitude from the Federal Reserve (Fed ) on interest rates, .
Around 2:20 p.m. GMT, the Dow Jones fell by only 0.02%, the S&P by 0.03%, the Nasdaq by 0.04% instead of -1.30% a few minutes earlier.
The dollar jumped almost 1% against the main currencies after the announcement of 528,000 job creations in July, almost twice as much as expected, while the unemployment rate fell by 0.1 point to 3.5%.
This unexpected dynamism of the job market, while analysts expected a slowdown in hiring to 250,000, had immediately provoked “an impulsive negative reaction” from investors fearing that the Fed would tighten its monetary policy even further. , indicated Art Hogan of B. Riley Wealth to AFP.
A solid employment report, combined with an increase in hourly earnings of 5.2% over the year, raised fears of overheating, and therefore the continuation of inflation, but at the same time seems to confirm the idea defended by the Fed that the world’s largest economy can withstand monetary tightening without falling into a severe recession.
The first “market reaction was the bad one. Clearly investors have focused on how the Fed should react to curb inflation but we must not forget that we are going to have another employment report, two inflation indices, yet another estimate of GDP before the members of the Fed meet”, judged Art Hogan.
“So to think that this jobs report is a game-changer is not the right way to look at it,” he said.
He also pointed out that since the pandemic, analysts’ projections were always “at odds” with reality. This economy “has been impossible to gauge for 18 months”.
But for Jason Furman, the former Barak Obama economist and Harvard professor, while “it’s good to see so many jobs being created, it’s scary to imagine what that means for the size of the adjustment that we could see coming”, he reacted in a tweet.
He was referring to the outlook for Fed rate hikes.
Bond strains
Immediately after the Department of Labor’s jobs report was released, CME Group’s futures calculations were pricing in 64% – up from 34% a day earlier – on another three-quarters percentage point rate hike ( 0.75%) at the next meeting of the Central Bank’s Monetary Committee on September 21 to raise them to between 3% and 3.25%.
Reflecting this renewed monetary tightening, yields on 10-year Treasury bonds jumped to 2.83% from 2.68%.
Eight out of 11 S&P sectors were down, including consumer spending and communication services (-1.35%).
The travel site Expedia climbed 1.78% after much better than expected results for the second quarter.
The American media and streaming giant Warner Bros Discovery was punished (-13.62%), the parent company of HBO, having recorded a turnover lower than expected and accusing losses.
Tesla fell 2.23% to 905.24 dollars while the general meeting of its shareholders endorsed an upcoming three-fold division of its share. New developments have also occurred in the legal battle that is brewing with Twitter as Elon Musk backtracked on his plan to take over the social network.
Lawyers for Twitter say the billionaire’s change of heart “is an attempt to evade a contract that Musk no longer finds attractive since the stock market fell.”
Twitter shares rose 1.78% to $41.79.