April 17, 2024

Stocks Flatten And Oil Hikes With Rate Hike Looming

On Friday, the Wall Street indexes ended the weekday flat, as there was an increase in Treasury yields after the US jobs report turned out to be stronger-than-expected. This is because the report just increased the possibility of the US Federal Reserve increasing interest rates for slowing down inflation and cooling the economy. On Friday, there was also a 2% rise in oil prices, but they remained down for the week. This was because there had been a sharp sell-off because of concerns about the demand for energy if the economy slows down.

The US job data

The US Labor Department published some strong data, which showed that more jobs had been added in the United States in June. This was an indication that a recession was not going to happen soon, given that job growth continues to be persistent. This also provides the Fed room for increasing the interest rate once more in its meeting scheduled for this month.

There was a 372,000 addition in the nonfarm payrolls in the US in June, which was significantly higher than what economists had been expecting. Meanwhile, the rate of unemployment continued to hold steady at 3.6%.

Stock indexes

All three of the stock indexes in the US closed the week mostly unchanged, as investors were balancing the solid news about the economy with the possibility of more hikes in the interest rate. There was a 0.15% drop in the Dow Jones Industrial Average, while a 0.1% drop was seen in the S&P 500. A 0.12% gain was also seen in the Nasdaq Composite.

Market analysts said that markets had been very gloomy of late, so some of the fears about an economic recession could be put to rest thanks to the strong labor market. This is because the data shows that the US economy is more resilient in the face of surging inflation because of a robust labor market.

Since the US Federal Reserve is committed to hiking rates for cooling inflation, it is likely that volatility is not going to end anytime soon. Raphael Bostic, the President of the Atlanta Fed, said on Friday that he was in support of another 75 basis points hike in the interest rate in order to tackle inflation.

Oil and Currencies

Friday offered some reprieve to oil prices but was still lower because of a sell-off due to fears of dwindling demand. There was a 2.3% rise in Brent crude futures that saw them reach $107.02 per barrel, while a 2% increase in US crude pushed it to $104.79 a barrel.

The US dollar index was also trading flat on Friday after it had reached its highest level earlier since 2002. As for the euro, the currency was drawing closer to parity against the greenback which had also occurred back in 2002. This is because of the concerns about the energy crisis in Europe due to Russian sanctions. Euro recorded a 0.19% before closing to reach a value of $1.01807.

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