TEPID IS THE NEW HOT
Squishy April jobs repor t spurs Street to party hearty
Wall Street cheered a mixed-bag April jobs report on Friday — buoyed by a drop in the unemployment rate to 3.9 percent, its lowest level in more than 17 years.
Stocks moved broadly higher even though the 164,000 jobs added during April missed forecasts.
April marked the 91st consecutive month of job increases.
The bad-news-is-goodnews result is based on investors’ belief that a lessthan-roaring US economy will keep the Federal Reserve from making four rate hikes in 2018.
As rates move higher, investor cash can get siphoned from stocks to bonds.
This was a “Goldilocks jobs report,” Mona Mahajan, US investment strategist of Allianz Global Investors, told The Post.
The Dow Jones industrial average closed up 332 points, to 24,263.
The low unemployment rate may have spooked markets but the slowdown of new jobs added, coupled with tepid wage growth of 2.6 percent over the last year, calmed investor worries that the Fed will aggressively raise interest rates to cool off an overheating economy.
The Fed had earlier telegraphed three rate hikes for the year. The first hike occurred in March.
But analysts think that the latest figures, which showed a slight slowdown in wage growth, will prevent the Fed from acting too aggressively.
“If I were the Fed looking at this [report], I would not be in a rush to raise rates,” Mahajan said, adding that a fourth rate hike was off the table. Other analysts concurred. “Investors loved the modest growth with low inflation. Rates will stay low,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors.
Friday’s figures showed that new job gains broke be- low the averages of the last two months, said Peter Cardillo, chief market economist at Spartan Capital Securities.
“This could signal that we’re reaching a peak point in hiring,” Cardillo said.
Also helping the market Friday was Warren Buffett’s decision to buy 75 million more shares of Apple, which hit an all-time high and led Dow with a 3.9 percent gain.
“The market is applauding the Warren Buffett purchase of Apple,” Cardillo said.
Other gainers on the blue chip index were McDonald’s, which climbed 3.1 percent, and The Walt Disney Co., which popped 2.4 percent. Chevron, which fell 0.4 percent Friday, was the only Dow component to end the day lower.
The broader markets also saw green Friday, with the S&P 500 and Nasdaq gaining 1.3 percent and 1.7 percent, respectively.
Despite the ebullience on Friday, both the Dow and the S&P closed down for the second straight week.
”We’re seeing a little bounce-back after the last few weeks,” Mahajan said, citing strong corporate earnings and yields on the 10year note falling back below 3 percent as positive indicators for the stock market.
“This is in line with people saying the Fed doesn’t have to be as aggressive,” she added.
The unemployment rate in April fell to 3.9 percent — the lowest since 2000 — while the 164,000 jobs created in the month were fewer than expected. With wages barely rising, Wall Street celebrated the likelihood that the Federal Reserve will be less aggressive on rate hikes, pushing stocks broadly higher.