Wall Street in disarray despite a big disappointment on employment

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AFP

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3 sept. 2021

The New York Stock Exchange was evolving in dispersed order Friday, digesting without much nervousness a figure of job creation in the United States well below expectations and after having recorded records the day before.

AFP

The Dow Jones fell 0.19% to 35,374.96 points, the high-tech Nasdaq gained 0.17% to 15,357.40 points and the S&P 500 expanded fell 0.07% to 4,533. 70 points. The day before, the latter two had closed at record levels.

The eagerly awaited monthly report of the Ministry of Labor, published before the stock market, reported 235,000 jobs created in August, significantly less than the 750,000 expected by economists. This brutal deceleration, after 1.1 million jobs created in July and 962,000 in June, is largely attributed to the resurgence of the Delta variant of the coronavirus.

“The good news? There isn’t,” commented Ian Shepherdson, chief economist at Pantheon Macronoeconomics in a note. “September will undoubtedly be weak too” in terms of job creation, he anticipated, “and we are starting to be nervous about the possibility of a rebound in October”.

Despite this disappointment, the unemployment rate continued to decline, to 5.2%, as expected, from 5.4% last month.

Although job creation was only a third of expectations, the indices reacted only moderately, said Adam Sarhan, founder and CEO of the management company 50 Park Investments.

“This report takes a lot of pressure off the Fed (US Central Bank) and the market knows it,” he explained. “That’s why there are no massive sales.”

With the strength of the recovery in the United States still raising questions, the prospect of the Fed withdrawing support measures for the US economy is fading somewhat. However, maintaining an accommodative policy in the short term is favorable to the equity markets.

However, the market offered a mixed picture on Friday, with bond yields tight, although the probability of a Fed key rate hike has diminished.

This rise in borrowing rates was attributed by several analysts to the rise in wages mentioned in the employment report, likely to fuel inflation. The 10-year US government bond rate rose to 1.33%, from 1.28% on Thursday.

The semiconductor maker Broadcom advanced (+ 2.01% to 501.78 dollars) after the publication, Thursday after market, of a quarterly profit above expectations. The group also said it was counting on maintaining its momentum in the fourth quarter (August to October) of its staggered fiscal year.

The specialist in digital transactions DocuSign was also benefiting (+ 6.01% to 312.27 dollars) also from better than expected earnings per share and forecasts that reassured investors on the group’s ability to digest the exit from the pandemic.

The “Chinese Uber”, Didi Chuxing, symbol of the setbacks of Chinese companies listed on Wall Street, took off on Friday (+ 5.33% to 9.28 dollars) thanks to information from the Bloomberg agency according to which a group of companies Beijing public authorities could take control of the company.

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