Summary:
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US stocks begin higher after strong NFP beat
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Another soft ISM read does little to curb enthusiasm
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Warren Buffet buys Amazon
Wall Street is seeking to regain its poise after a couple of wobbly sessions following the Fed decision, with the market receiving a boost from the latest jobs report which showed the unemployment rate in April fall to 3.6% - its lowest level since 1969. This was one of several strong points in the NFP release which showed 263k jobs added, small positive revisions to the prior releases and average earnings hold steady at 3.2% Y/Y against consensus calls for a rise to 3.3%.
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US stocks have recovered a fair chunk of the declines seen since Powell’s press conference. The strong NFP has supported this recovery and even a soft ISM reading has not caused too much of an initial adverse reaction. Source: xStation
As far as equities are concerned the NFP release provided a nice mix with stellar jobs figures coupled with lower than forecast wage growth. Not long afterwards the most recent ISM non-manufacturing release came in below forecasts, but while it provided some resistance to the advance in stocks, it is perhaps telling that there wasn’t more of a decline. The print of 55.5 for April was below the 57.0 expected and together with Wednesday miss in the manufacturing equivalent suggests that the US economy is slowing. Drilling down into the subcomponents new orders fell to 58.1 from 59.0 prior while prices paid fell to 55.7 from 58.7.
With this release marking the final key data point of the week from the US, the overall picture remains supportive of stocks. Even though the survey data suggests the economy is cooling, employment remains extremely strong and what is more, this isn’t showing any signs of rising inflationary pressures. White House advisor Larry Kudlow wasted little time in reiterating his call for rate cuts after the NFP data and while this would be an unorthodox policy move, the latest data has done little to decrease the chances of it happening.
ISM services PMI fell to its lowest level in over 18 months in April, but this failed to cause much selling in stocks, with equities possibly moving into a phase where soft news is positive. Source: xStation
Shares in Amazon are making a decent push higher this afternoon with the stock boosted by news that Berkshire Hathaway has just bought its first shares in the retailer. "One of the fellows in the office that manage money ... bought some Amazon," Buffett said in an interview with CNBC. He was referring to Berkshire Hathaway's top investment managers Ted Weschler or Todd Combs, according to CNBC. We recently pointed out that Amazon had printed a golden cross with the 50 day SMA moving above the 200, and while it is highly unlikely this will have impacted Berkshire’s thinking in buying the stock, the news that it has will likely provide a further boost to the market.
Shares in Amazon have hit their highest level of the year today, with the stock jumping after news broke that Berkshire Hathaway have been buying shares in the retailer. Source; xStation
