Major Averages Post Winning Week Amid Mixed Economic Signals

Vida Markets

Monday 10th June 2024, 11:45 am Time to read: 6 mins.

Despite a stronger-than-expected jobs report, the S&P 500 ended flat on Friday, touching a record-high intraday and closing just shy of its all-time high. This performance highlights the market's resilience amid economic data that defied expectations. The Dow Jones Industrial Average also faced pressure, while the Nasdaq Composite edged lower. However, all three major averages

Despite a stronger-than-expected jobs report, the S&P 500 ended flat on Friday, touching a record-high intraday and closing just shy of its all-time high. This performance highlights the market's resilience amid economic data that defied expectations. The Dow Jones Industrial Average also faced pressure, while the Nasdaq Composite edged lower. However, all three major averages posted a winning week, reflecting investor confidence in the economy's strength. Initially, concerns arose that strong job numbers might deter the Federal Reserve from cutting interest rates, but the market's overall positive sentiment prevailed. As the European Central Bank's rate cut and mixed global economic signals continue to influence market movements, the focus remains on navigating these dynamics while eyeing potential growth opportunities.

Key Takeaways:

S&P 500 Closes Near Record High: The S&P 500 ended the week nearly flat, slipping 0.11% to close at 5,346.99 after reaching an all-time high intraday. The index added 1.32% over the week, reflecting strong market resilience despite initial concerns from the jobs report.
Dow Jones Industrial Average Dips: The Dow Jones Industrial Average fell 87 points, or 0.22%, to close at 38,798.99 on Friday. Despite the drop, the Dow posted a 0.29% gain for the week, indicating investor confidence amid mixed economic signals.
Nasdaq Composite Edges Lower: The Nasdaq Composite declined by 0.23% to finish at 17,133.13, yet it achieved a significant weekly advance of 2.38%, driven by robust performances in the technology sector, including Nvidia’s strong showing.
Robust Jobs Report Surpasses Expectations: Nonfarm payrolls increased by 272,000 in May, far exceeding the Dow Jones estimate of 190,000 and April's gain of 175,000. Average hourly wages rose 0.4% month-over-month and 4.1% year-over-year, even as the unemployment rate ticked up to 4%.
Treasury Yields Surge: The yield on the 10-year Treasury climbed nearly 15 basis points to 4.43%, while the 2-year Treasury yield rose about 17 basis points to 4.885%, reflecting investor concerns about the Federal Reserve’s potential rate decisions following strong jobs data.
European Markets Close Lower: The Stoxx 600 ended Friday down 0.16% as investors processed the US jobs report and the ECB's latest rate cut. Germany's economy is projected to grow by 0.3%, slightly below the previous 0.4% estimate. The FTSE 100 Index is down 30.01 points or 0.36% last week.
Mixed Performance in Asia: Japan’s Nikkei 225 slipped 0.05% to 38,683.93, while South Korea’s Kospi rose 1.23% to 2,722.67. China’s May exports beat expectations with a 7.6% increase, but imports grew only 1.8%, missing forecasts.
Crude Oil Posts Weekly Loss: US crude oil futures closed at $75.53 a barrel, down 3 cents, marking a third straight weekly loss despite a late-week bounce. Brent futures settled at $79.62 a barrel, down 25 cents, as concerns over softening demand persist.
FX Today:

Gold Prices Drop: Gold prices fell to $2,295, down more than 3%, pushing the non-yielding metal below the $2,300 mark. The next key support levels are at $2,277 and $2,222, with potential for further declines if selling pressure continues.
EUR/USD Rebounds Amid Strong US Data: The EUR/USD pair fell sharply to 1.0800 following the stronger-than-expected US jobs report. The pair had seen a peak of 1.0900 earlier in the week but dropped nearly a full percent on Friday. The EUR/USD is now trading around the 200-day Exponential Moving Average (EMA) at 1.0800, with potential further declines towards 1.0750 if bearish momentum continues.
GBP/USD Tumbles Post-NFP: GBP/USD declined 0.53% to trade at 1.2722 after the US Nonfarm Payrolls report exceeded expectations. The pair faced significant support at 1.2700, with further key levels at 1.2694 and 1.2680. If buyers manage to reclaim 1.2740, the pair could see a range-bound movement between 1.2750 and 1.2800.
USD/JPY Targets Higher Ground: USD/JPY climbed above 156.50, clearing the June 4 high of 156.48 and setting sights on 157.00. Resistance levels include the April 26 high of 158.44 and the year-to-date high of 160.32. Support lies at 155.52, with additional levels at the 50-day moving average of 154.98 and at around 153.40.
USD/CAD Nears Monthly Highs: USD/CAD surged above 1.3750 on Friday, hitting its highest level since early May. The pair closed strongly above the 200-day EMA, with the next resistance at the late April high of 1.3785 and the yearly high of 1.3846. A pullback might see support at 1.3700, but bullish momentum is likely to persist.
AUD/USD Pulls Back Sharply: AUD/USD dropped 100 pips on Friday to test the 0.6580 level following surprising NFP data. The pair had previously hovered around the pre-pandemic low of 0.6680. Dynamic support is seen at the 50-day SMA of 0.6538, while resistance remains at 0.6644.
NZD/JPY Faces Selling Pressure: NZD/JPY declined towards the 20-day SMA at 95.70 as selling pressure mounted. Despite a jump from around 91.00 to 96.00 since early May, the pair is consolidating and may test further support levels if the bearish trend continues.
Market Movers:

GameStop Plummets on Earnings Report: GameStop shares plunged 40% after trader “Roaring Kitty” provided little new information during a livestream and the company posted disappointing earnings. Net sales for Q1 were $881.8 million, marking a 29% decline from the previous year. The company also announced plans to sell additional stock, further weighing on investor sentiment.
Vail Resorts Slides on Quarterly Results: Shares of Vail Resorts fell 10.32% following a quarterly earnings miss. The ski resort owner reported earnings of $9.54 per share on $1.28 billion in revenue, falling short of the consensus estimate of $9.97 per share on $1.30 billion in revenue.
Oddity Tech Soars on Buyback Program: Oddity Tech shares jumped 20.54% after the beauty and wellness company's board approved a $150 million share buyback program. The company also boosted its Q2 earnings outlook, driving investor optimism.
Semtech Plummets on CEO Departure: Semtech shares dropped 17.9% after the semiconductor manufacturer announced the departure of CEO Paul Pickle. The board cited differences in leadership vision as the reason for his exit. Dr. Hong Q. Hou, a current board member, was named as his successor. The company also reaffirmed its Q2 forecast.
DocuSign Dips Despite Strong Results: DocuSign saw its shares decline by 4.67%, even after reporting fiscal Q1 results that topped analyst expectations. The electronic signature company guided for Q2 revenue between $725 million and $729 million, versus the $726 million consensus estimate, and authorised a $1 billion stock buyback.
Planet Labs Gains on Earnings Beat: Planet Labs stock rose 10.99% after posting better-than-expected Q1 results. The satellite imagery provider reported an adjusted loss of 5 cents per share and $60.4 million in revenue, beating analyst expectations of a 7 cent loss per share and $60 million in revenue.
Geron Rises on FDA Approval: Geron shares surged 17.99% after the US FDA approved its blood disorder treatment, Rytelo, ahead of schedule. The earlier-than-anticipated approval boosted investor confidence in the biopharmaceutical company's prospects.
Skechers Upgraded, Shares Increase: Skechers shares increased by 1.82% following an upgrade to “buy” from Bank of America, which cited an improving wholesale environment for the footwear maker.
Samsara Slips Despite Earnings Beat: Samsara shares slid 12.34% despite reporting an earnings and revenue beat for Q1. The software maker guided for Q2 revenue between $288 million and $290 million, slightly above the $287 million estimate, but projected earnings between breakeven and 1 cent per share, versus a 1 cent consensus estimate.
Gold Stocks Decline on Falling Prices: Shares of gold miners Newmont and Freeport-McMoRan fell 5.04% and 3.86%, respectively, due to declining gold prices. Royal Gold, a precious metals stream and royalty company, also dropped 5.45%.
As markets wrapped up the week, the flat close of the S&P 500, despite touching a record-high intraday, underscores the resilience amid robust economic data and shifting investor sentiment. The stronger-than-expected jobs report, with nonfarm payrolls increasing substantially in May, highlighted the labour market's strength but also fuelled concerns about future interest rate cuts. Meanwhile, European stocks closed lower and Asian markets showed mixed performance, reflecting a complex global economic landscape. Key stock movements, including GameStop's dramatic plunge and Oddity Tech's surge, further emphasised the market's volatility. With the Federal Reserve's rate decision and upcoming economic data on the horizon, investors remain cautious yet hopeful, navigating the delicate balance of growth opportunities and economic uncertainties.

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