Treasuries fell after a strong U.S. jobs report increased bets of tighter monetary policy while U.S. stocks powered higher on bullish sentiment from Amazon.com Inc. earnings.
The yield on the U.S. 10-year note rose to 1.92% as traders gave roughly even odds to the chance the Federal Reserve will start to raise interest rates with a 50 basis point hike in March instead of a typical quarter point move.
The S&P 500 gained 0.5%, erasing an earlier loss, while the Nasdaq 100 added 1.3% with Amazon up 14% on a price increase for Prime memberships. The dollar was stronger against major peers while still posting its worst weekly performance since 2020.
U.S. employers added more jobs than forecast last month, despite a surge in Covid-19 infections and related business closures. Nonfarm payrolls gained more than all economists expected and average hourly earnings also rose 0.7% month over month.
“The jobs report blew away expectations across the board,” said Cliff Hodge, chief investment officer for Cornerstone Wealth. “The report is unequivocally good for the economy, but not for markets as the strength in the numbers presents another data point which supports more aggressively hawkish Fed action.”
It’s been a volatile week in markets as investors were jolted by weak numbers at U.S. tech giants including Facebook-owner Meta Platforms Inc., which wiped more than $250 billion from its market value on Thursday. However, positive earnings from Amazon helped lift sentiment, with the online marketplace and tech company adding roughly $190 billion to its market capitalization.
“It seems like each day we wake up to, ‘Thank you sir, may I have another?’ as a few tech blowups drag down the overall market,” said Mike Bailey, director of research at FBB Capital Partners. “There is an interesting behavioral metric where one bad thing requires four to five good things to make up for it.”
Dip buyers have hoped a stronger earnings season would keep equities attractive and counter some concerns about rate hikes in the face of higher inflation. Of the 272 companies in the S&P 500 that have reported results, 82% have met or beaten estimates, with profits coming in 8.8% above projected levels.
Still, signs of stubborn price pressures abound with the latest data showing U.S. gasoline prices at the highest in more than seven years. Crude oil gained 2.2% in New York, extending a seven-year high, while banks including Goldman Sachs Group Inc. now forecast Brent will reach $100 a barrel.
Hawkish comments from European Central Bank President Christine Lagarde and a Bank of England interest-rate hike underlined risks from inflation. While a selloff in the region’s bonds eased Friday, the mood in the stock market was sour with Europe’s Stoxx 600 falling 1.4%.
Some of the main moves in markets:
- The S&P 500 rose 0.5% as of 4 p.m. New York time
- The Nasdaq 100 rose 1.3%
- The Dow Jones Industrial Average was little changed
- The MSCI World index rose 0.4%
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro rose 0.1% to $1.1454
- The British pound fell 0.5% to $1.3530
- The Japanese yen fell 0.2% to 115.20 per dollar
- The yield on 10-year Treasuries advanced nine basis points to 1.92%
- Germany’s 10-year yield advanced six basis points to 0.21%
- Britain’s 10-year yield advanced four basis points to 1.41%
- West Texas Intermediate crude rose 2.2% to $92.23 a barrel
- Gold futures rose 0.2% to $1,808.30 an ounce