On Friday (November 3rd), the weak employment report in the US market led to a decrease in bond yields and a rise in the stock market, which could set for the best performing week of 2023.
As of press release, the Dow Jones Industrial Average rose 0.48%. The Standard&Poor's 500 Index and Nasdaq Composite Index rose 0.73% and 0.87% respectively.
As investors hold increasing hopes for the end of the Federal Reserve's interest rate hike, the stock market will experience significant weekly gains. As of Thursday's close, the Dow rose 5%. The Standard&Poor's 500 Index rose 5.6% this week, while the Nasdaq Index rose 5.8% - both will have their best week since November 2022.
The October employment report released on Friday was weaker than expected, indicating that the Federal Reserve's efforts to cool the economy and curb inflation may be working. Last month, the US economy added 150000 jobs, which is lower than the 170000 job growth expected by Dow Jones and also lower than the 297000 job growth spurted in September. The unemployment rate has risen to 3.9% and is expected to stabilize at 3.8%.
The average hourly salary in October was also lower than expected, increasing by 0.2%, lower than the expected 0.3% increase.
Global X portfolio strategist Michelle Cluver said, "From a stock market perspective, this data alleviates some of the pressure from inflation and interest rate concerns, while still reflecting a strong labor market with employment growth faster than a neutral growth rate of around 100000
Due to lower than expected employment data and slower average hourly income growth, bond yields, which have been putting pressure on the stock market over the past three months, plummeted on Friday. The yield of 10-year treasury bond fell more than 9 basis points to 4.57%, lower than the 5% high hit last month. The yield of two-year treasury bond bonds fell 7 basis points to 4.9%.
Gold prices fluctuated sharply in the US market on Friday. After the weaker-than-expected non farm report was released, gold surged close to $10 to above $2000. After a mild decline in US service industry activity in October, gold prices have already fallen from their intraday highs. The current price is 1994.19 US dollars per ounce.
ISM stated that its Service Procurement Manager Index slightly decreased to 51.8 last month, down from 53.6% in September. This data is lower than the consensus estimate of 53.
Anthony Nieves, Chairman of the ISM Services Business Survey Committee, stated in a report: "The composite index shows the tenth consecutive month of growth in October, with a reading of 49.2% in December 2022, which is the first contraction since May 2020
The employment index in October was 50.2, a decrease from 53.4 last month. The business activity index for October was 54.1, a decrease of 4.7 from 58.8 in September; The new order index for October was 55.5, 3.7 percentage points higher than September's 51.8.
A reading of more than 50% for this type of diffusion index indicates economic growth, and vice versa. The further the indicator is above or below 50%, the greater or smaller the rate of change.
