Nonfarm Payrolls Increase but Higher Unemployment Brings Stocks Down
The stock markets closed low on Friday in response partially to the underwhelming jobs reports released during the week.
The Dow Jones closed down 0.18% on Friday at the end of trading, following reports that unemployment had risen, even though job creation in the US increased.
The S&P 500 was also down, falling 0.65%. The Nasdaq Composite closed down as well with a drop of 1.16%.
The Nonfarm Payrolls report came out last week and showed that there was an increase of 275,000 for the month. That gave the market a little boost but was countered by reports of unemployment rising to 3.9%.
These numbers will continue to keep the market tempered for now, preventing the level of trading we might expect if the jobs reports came back overwhelmingly positive. There are still inflation fears to keep the market back, as well as a number of earnings reports that have not been as promising as expected.
Broadcom closed lower this week than expected as its earnings report came in. Even though the chip maker earned more than last quarter, the sales increase was not as much as investors had expected, and the stock price fell by 6.99% on Friday.
Costco’s stock closed 7.64% down on Friday as well, even though its earnings report was broadly positive. Like Broadcom, the sales increase was not as much as anticipated, and the stock declined.
Stock Market Outlook for the Week
Expect much of the stock market movement to happen in the categories of artificial intelligence companies and medical companies. These have been the major stock moves lately. As more companies release their earnings reports, we are seeing a trend of poor stock prices when earnings are less than expected, even when sales have increased.
Why might that be? The sluggish stock prices can likely be linked to the sluggish economy. As the Federal Reserve holds back on interest rate cuts due to the slow inflation movement in the right direction, companies need to perform well to show indications of being recession proof. Investors are still hesitant to put their assets into stocks that could go bearish if a poor economic report is released.
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