Stocks lost momentum and fell in afternoon trading Friday as some investors pulled back after strong gains led by big tech companies. February’s jobs report also showed an increase in the unemployment rate, increasing investors’ confidence that the Federal Reserve will cut interest rates after its June meeting.
The S&P 500 (^GSPC) remained mostly flat after setting a new record close on Thursday, while the Dow Jones Industrial Average (^DJI) rose nearly 0.3%. The tech-heavy Nasdaq Composite Index (^IXIC) fell 0.3% after surging the previous day.
Friday’s nonfarm payrolls report showed the U.S. economy added 275,000 jobs in February, again well ahead of Wall Street expectations. However, the unemployment rate rose to 3.9%, the first increase in four months. Ahead of the employment report, futures prices for the three major averages were trading in the red.
This week, Chairman Jerome Powell told lawmakers it is “not long” before the Fed is confident that inflation is in the right conditions for the central bank to start lowering borrowing costs. The market was pushed up.
With inflation falling faster than expected, European Central Bank policymakers lined up to support interest rate cuts ahead of the summer break, showing the wind is blowing elsewhere. Meanwhile, Bank of Japan officials are said to be open to the idea of eventually raising interest rates from negative territory.
On the corporate side, Costco (COST) stock fell 7%, overshadowed by quarterly sales that did not beat earnings. Broadcom (AVGO) failed to impress investors after sales exceeded expectations for $10 billion in AI-related chip sales, sending its stock down more than 6%.
In the commodity market, gold futures (GC=F) continued to rise as spot gold prices aimed for their biggest weekly gain in five months amid optimism about a mid-year Fed rate cut.
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