Wall Street surged strongly following the latest employment signals, but Chile’s main index fell.
Although the new job positions exceeded expectations, average wages slowed down, reinforcing the hypothesis of a soft landing for the US economy.
Optimism pervades Wall Street this Friday following the latest nonfarm payrolls report in the United States. While the increase in job numbers came as a surprise, which puts upward pressure on interest rates, it aligned with expectations of a slowdown in average wages, considered a significant source of inflationary pressures.
At session highs, the Nasdaq Composite surged 1.42%, the S&P 500 rose 1.33%, and the Dow Jones gained 0.95%. This resurgence follows losses from the previous session due to cautious remarks from the Federal Reserve and increased geopolitical tensions in the Middle East.
In contrast, the Chilean S&P IPSA dropped 0.3% to 6,567.10 points. The biggest declines of the session were observed in Quiñenco (-3.43%), Cencoshopp (-2.41%), and Parque Arauco (-2.33%). The Luksic group’s holding company announced this morning a dividend proposal of 30% of its 2023 profits, subject to approval at the upcoming shareholders’ meeting.
The new labor figures in the US reported 303,000 jobs added in March, surpassing the expected 214,000. The unemployment rate dropped by a tenth to 3.8%, as anticipated. Also in line with the overall forecast, average wages decelerated to a 4.1% annual rate, the lowest since June 2021.
Overall, it was a relatively solid report that continues to support the hypothesis of a soft landing. Average hourly wages have now overtaken payrolls as the most important labor indicator.
Equity purchases are being accompanied by bond sales. The yield on the 10-year Treasury rose to levels not seen since November, in light of the signs of economic strength. Swap rates now imply a 43% probability that the Fed will not cut rates in June, up from 34% yesterday, according to the CME FedWatch Tool.
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