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Nasdaq and Dow Surge on “Goldilocks” Jobs Report; S&P Poised for Best Week of 2023

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The Nasdaq and Dow Jones Industrial Average (Dow) experienced significant gains on Friday as investors reacted positively to a โ€œGoldilocksโ€ non-farm payrolls report. This report further supported the belief that the Federal Reserve had completed its rate hikes. Bond prices also rallied, leading to a decline in Treasury yields.

The S&P 500 index (S&P 500) is on track to close the week with a remarkable 6% increase. This marks a substantial rebound from the recent correction it experienced.

At mid-day, the S&P 500 index had increased by 0.99% to reach 4,360.61 points. The Nasdaq Composite index, which is primarily comprised of tech stocks, rose by 1.16% to reach 13,448.93 points. The Dow, representing major blue-chip stocks, saw a 0.72% increase to reach 34,082.07 points.

Over the course of the week, the Nasdaq and Dow have seen gains of 6.37% and 5.13%, respectively.

All eleven sectors of the S&P 500 index have shown positive movement, with the exception of the Energy sector.

The U.S. Bureau of Labor Statistics recently reported that non-farm payrolls increased by 150,000 in October, falling short of the expected 179,000 and significantly lower than the 297,000 jobs added in September. Additionally, the unemployment rate ticked up from 3.8% to 3.9%. These statistics were released just two days after the Federal Reserve decided to maintain interest rates, with Fed Chair Jerome Powellโ€™s subsequent press conference being perceived as dovish.

Mohamed El-Erian, the chief economic advisor at Allianz, described the U.S. jobs report as โ€œGoldilocks,โ€ aligning with Powellโ€™s message of a soft landing. Similarly, JPMorganโ€™s Michael Feroli commented that the report indicates a softening in labor market activity, while also suggesting the potential for a future harder landing.

Following the jobs report, Treasury yields continued to decline. The 30-year and 10-year yields dropped by 9 and 12 basis points, respectively, reaching 4.73% and 4.55%. Meanwhile, the 2-year yield, which is more sensitive to interest rate changes, declined by 11 basis points to 4.86%.

Apple (AAPL), despite experiencing a slight decline in its stock price, did not significantly impact the positive sentiment driven by the jobs report. The tech giantโ€™s guidance for the upcoming holiday quarter was viewed as disappointing, leading to a minor drag.

On the earnings front, Expedia (EXPE) gained significant traction in the stock market, climbing to the top of the S&P 500 percentage gainers list. The online travel booking platform reported record quarterly revenue and profitability. Similarly, Paramount (PARA) (PARAA) experienced substantial gains after the media and entertainment company reduced its quarterly streaming losses. Conversely, Fortinet (FTNT) suffered the most significant percentage loss in the S&P 500, following a weak outlook and resulting in analyst downgrades.

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