Friday saw record-breaking market surges before Wall Street took profits and U.S. Treasury yields fell following a neutral day. U.S. jobs figures strongly suggested the Fed will ease by mid-year.
After the Labor Department reported accelerated job creation in February, even as the unemployment rate rose and wage gains stalled, two U.S. stock indices entered uncharted territory. The mixed report kept a June Fed rate drop on the table.
The S&P 500 and Nasdaq reversed direction, although the Dow Jones Industrial Average (.DJI) did not set a record. The Dow (.DJI) slid 68.66 points, or 0.18%, to 38,722.69, the S&P 500 (.SPX) lost 33.67 points, or 0.65%, to 5,123.69, and the Nasdaq Composite (.IXIC) plummeted 188.26 points, or 1.16%, to 16,085.11.
I don't think this is much more than saving money. Scott Wren, Senior Global Market strategist, Wells Fargo Investment Institute in St. Louis, said it doesn't affect momentum. Do I think we'll see a five- or 10-percent pullback in the next month or two? I do." After the much-anticipated payrolls statistic, focus moved to next Tuesday's CPI inflation report.
Central bankers from the US and Europe reinforced expectations that borrowing prices will be slashed in the summer, sending market indices to new highs on Friday. A day after the European Central Bank maintained rates constant, Francois Villeroy de Galhau predicted a rate decrease was coming in the spring, from April until June 21, the central bank's meeting that month.
Markets also expect a June Fed rate decrease. After U.S. companies added an unexpected 275,000 jobs last month, even if preceding months' data were revised down, some traders gambled on a May Fed rate cut. "The immediate takeaway is the focus on the unemployment rate rising from 3.7% to 3.9%," said Dakota Wealth senior portfolio manager Robert Pavlik. "More unemployment rate implies that the economy is slowing, which would, in the markets' view hopefully, necessitate a rate cut sooner rather than later."
MSCI's global stock index (.MIWD00000PUS) reached a record high before falling 0.27%. The STOXX (.STOXX), opens new tab index of 600 businesses in Europe reached a new lifetime high, closing 0.02% higher, while the broad FTSEuroFirst 300 index (.FTEU3) fell 0.03%.
While central banks on both sides of the Atlantic manage expectations of when they will lower borrowing costs, speculators pushed up the yen after news that Japan's central bank may raise rates from negative territory this month.
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