Wall Street futures fell slightly on Monday, with the Dow Jones down 0.08% and the S&P500 down 0.09%. Furthermore, there was a contraction in the yield on the 10-year US Treasury, which stands at 3.428%, and in the work on the 10-year BTP, which stands at 4.193%.
European stock markets are expected to rise slightly, with Eurostoxx 50 futures pointing to a 0.12% gain.
This follows statements by Dutch Central Bank President Klaas Knot on May 7, who said that the European Central Bank’s interest rate hikes are starting to have an impact, but further measures will be needed to control the influence.
After four consecutive days of declines, the major US stock market indexes rallied significantly on Friday. This was due to the strong rally in shares of regional banks, initially declining, and substantial gains in shares of Apple Inc.
The Dow Jones Industrial Average rose 1.65%, gaining 546.64 points and ending the day at 33,674.38 points.
The S&P 500 also rallied 1.85%, finishing at 4,136.25 points. Meanwhile, the Nasdaq Composite posted the most significant gain of the day, rising 2.25% to close at 12,235.41 points.
However, the stock market’s bullishness on Friday was insufficient to offset the weekly losses suffered by the S&P 500 and the Dow. These two significant indices experienced the largest weekly declines in the week ended March 10, with falls of 0.8% and 1.2%, respectively, according to preliminary closing data provided by FactSet.
Meanwhile, the Nasdaq Composite managed to gain just 0.1% over the week. On Wednesday, Federal Reserve officials raised the policy rate by 25 basis points from 5% to 5.25%. This is the highest rate recorded since 2007. During the announcement, Fed Chairman Jerome Powell stressed that no immediate rate cuts are expected.
In the past week, the stock market rally took another hit on worries about bank contagion. Despite deposit updates released overnight, PacWest Bancorp (PACW) and Western Alliance Bancorp (WAL) continued to suffer losses and were among the biggest losers. Additionally, other regional banks also saw declines, including Bank of America (BAC), Wells Fargo (WFC), and JPMorgan Chase (JPM).
Apple reported strong earnings, driven by solid revenue performance from iPhone and services. In addition, the company announced a $90 billion share repurchase and a slight increase in dividends. As a result, the market reacted positively, with a 2.5% gain in pre-market trading.
Berkshire Hathaway announced an operating income of $8.065 billion on Saturday, up 12.6% from a year earlier. This growth is attributed to increased revenue from insurance investment and underwriting. However, BNSF’s rail businesses and the energy company reported declining profits.
Net income, including short-term investment earnings, rose to an estimated $35.5 billion from $5.58 billion a year earlier, beating investor expectations by $8.1 billion. Warren Buffett advises investors to pay attention to operating results.
Treasury yields rose on Friday, mainly due to a hike in the 3-year rate. This came as the release of April’s robust jobs report made it less likely for traders to expect the Federal Reserve to cut rates next month.
St. Louis Federal Reserve Chairman James Bullard said on Friday that the risk of a recession in the United States is not as high as some indicators. In a speech given to the Economic Club of Minnesota, Bullard said he believes the US economy will continue to experience slow growth, a weaker job market, and a dwindling existence. According to Bullard, this would be a “soft landing scenario.”
In April, the US economy added 253,000 jobs, beating Wall Street expectations for 180,000 new jobs. Despite this, the stock market has rallied.
Price lists for Friday, 8 May 2023
DOW Jones 33.628,32−46,06
S&P 500 4.138,98+2,73
NASDAQ 100 12.249,51+14,10
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