World stock markets surged to a new high on Nov 2 as the dollar strengthened by new U.S. economic data that reinforced the impact of monthly payrolls report.
Wall Street received a shot in the arm with a 3.33 percent gain in shares of Apple Inc, after the iPhone maker reported better fourth quarterly results that surprised the market.
The job growth in the US apparently accelerated in October after the turbulence from hurricane disruptions of Sep. But the labor market showed up concerns of fall in annual wage gains and more people quitting the workforce.
“I didn’t think the payrolls number was really all that bad - unemployment went down, the participation rate went down, that was sort of a negative to me and the average hourly earnings was not so hot either,” noted Thomas Martin, senior portfolio manager at Global Investments in Atlanta.Apple’s Earnings
Apple announced a huge profit for the fourth quarter compared to the corresponding period in 2016. Its bottom line sprang up $10.71 billion, equaling $2.07 per share contrasting with the $9.01 billion ($1.67 per share) for the fourth quarter of 2016.
According to Apple, the latest quarter’s revenue increased 12.2 percent to $52.58 billion versus $46.85 billion in 2016.
The stock price zoomed 3 percent in after-hours trading on Nasdaq at $173.09 representing a 58 percent jump over the $109.93 price on Nov 3, 2016.
Apple’s stronger-than-expected results on Thursday offered a rosy forecast for the major Wall Street indexes. The high demand for new iPhone X has led Apple’s market capitalization moving to $1 trillion in terms of valuation.
At Wall street, more than 400 of S&P 500 companies reported earnings and had 72.4 percent of them exceeding Wall Street expectations. It was more than 72 percent average over the past four quarters.
The Dow Jones Industrial Average rose 30.51 points (0.13 percent), the S&P 500 scored 6.95 points (up by 0.27 percent) and the Nasdaq Composite gained 42.87 points or 0.64 percent.
European shares also closed higher on tech stocks and carmakers. The pan-European FTSE Eurofirst 300 index rose 0.27 percent and MSCI’s stocks index across the globe moved up 0.02 percent.
Traders see a 90.2 percent chance of a rate hike at the central bank’s next meeting, according to Thomson Reuters data. The dollar gained strength after data on U.S. manufacturing and services reversed a drop following the payrolls report. The dollar index was up 0.34 percent, with the euro down 0.48 percent to $1.16.Job Data Portends Rate Hike
The US unemployment rate at 4.1 percent indicated labor conditions have returned to normal after the hurricane devastation in September.
The debt yields of U.S. government instruments held steady after the Department of Labor reported that the economy added 260,000 jobs during the month of October. The number may keep the Federal Reserve bold enough to raise rates in December. Yields had dipped after it fell short of Wall Street expectations anticipating a larger rebound after Hurricanes Harvey and Irma depressed the September jobs report.
The yield on the benchmark 10-year Treasury note rose to 2.345 percent while the yield on the 30-year Treasury bond crashed 2.823 percent. Bond yields move in a direction inverse to prices.Jay Powell To Be Next Fed Chief
Bond traders are expecting dramatic moves by the new Fed Chairman nominee. President Donald Trump nominated Fed Governor Jay Powell as head of the Fed. He will take over in February 2018 and replace current Chair Janet Yellen when her term ends. However, the Federal Open Market Committee’s November meeting had decided to hold the rates steady. But the consensus is that the FOMC may hike rates in December for the third time in 2017.US Corporate Tax To Be Cut
Meanwhile, Republicans are pitching an overhaul of the tax code to lower the corporate tax rate to 20 percent and plans to move a House bill to cut the number of income tax brackets from seven to four.
Meanwhile, despite tensions with North Korea, President Trump’s Asian trip is starting on Friday. It will take him to Japan, South Korea, China and the Philippines to bolster the relations with Asian nations.