S&P500 records its first-five day gain since June

Stocks rose Friday after a soft jobs report drove bond yields lower, and the major averages registered their best week in 2023.

The Dow Jones Industrial Average gained 222.24 points, or 0.66 per cent to 34,061.32. The S&P 500 climbed 0.94 per cent to 4,358.34 and notched its first five-day advance since June. The Nasdaq Composite jumped 1.38 per cent to 13,478.28.

Equities notched sizable weekly gains as investors grew hopeful that the Federal Reserve’s rate-hiking campaign is over. The Dow was up by 5.07 per cent in its best week since October 2022. The S&P 500 was higher by 5.85 per cent and the Nasdaq gained 6.61 per cent. It was the best week for both indexes since November 2022.

The October jobs report on Friday came in weaker than expectations, showing the Fed’s attempt to cool the economy and stifle inflation could be working. The U.S. economy last month added 150,000 jobs, below the 170,000 payrolls increase consensus estimate from Dow Jones, and lower than September’s blowout of 297,000 jobs added. The unemployment rate rose to 3.9 per cent, compared to expectations that it would hold steady at 3.8 per cent.

Average hourly earnings also missed expectations on a monthly basis, rising 0.2 per cent in October, below the anticipated 0.3 per cent increase.

Bond yields, which have weighed on the stock market the last three months, tumbled Friday in the wake of the softer-than-expected payrolls figures and lighter average hourly earnings increase. The 10-year Treasury yield lost more than 9 basis points to 4.57 per cent, down from the 5 per cent high it hit last month. The 2-year Treasury yield lost 13 basis points to 4.8 per cent.

Yields and prices move in opposite directions. One basis point equals 0.01 per cent.

The S&P 500 rallied Friday without participation from its biggest member. Apple fell 0.5 per cent after the iPhone maker issued a weak revenue outlook for the December quarter.

The rebound last week came as the S&P 500 closed out a dismal period of three months straight with losses. The rally last week was sparked by the Fed’s decision to hold rates steady for a second straight time, along with the Department of Treasury’s borrowing plans that were less burdensome than feared.

Turning to US sectors, Energy was the worst performer on Friday. Real Estate was the best performer.

In commodity related news, despite the recent price drops and concerns about a global electric vehicle adoption slowdown, major lithium producers remain optimistic about long-term demand for battery metals. They view the current market volatility as short-term and expect continued growth in electrification.

Futures

The SPI futures are pointing to a 0.2 per cent gain.

Currency

One Australian dollar at 7:50 AM was buying 65.06 US cents.

Commodities

Gold added 0.29 per cent. Silver gained 1.92 per cent. Copper added 0.25 per cent. Oil lost 2.36 per cent.

Figures around the globe

European markets closed mixed. London’s FTSE fell 0.39 per cent, Frankfurt added 0.30 per cent, and Paris closed 0.19 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei was closed on Friday, Hong Kong’s Hang Seng gained 2.52 per cent while China’s Shanghai Composite closed 0.71 per cent higher.

On Friday, the Australian share market closed 1.14 per cent higher at 6,978.

Ex-dividends

Champion Iron (ASX:CIA) is paying 11.5162 cents ufranked
Embark Early Ed (ASX:EVO) is paying 2 cents fully franked

Dividends payable

United Overseas Australia Ltd (ASX:UOS)
COSOL Ltd (ASX:COS)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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