New York Stock Market Rises on Revived Hopes for Interest Rate Cuts

Rising Amid Signs of Cooling in the Job Market
Fed Officials' Remarks Continue This Week
Walt Disney, Uber, and Others Also Report Earnings

The three major indices of the U.S. New York stock market showed an upward trend in the early trading session on the 6th (local time). Investor sentiment is recovering as expectations for a Federal Reserve (Fed) interest rate cut are revived following the release of indicators suggesting a cooling labor market.

As of 9:42 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was trading at 38,822.48, up 0.38% from the previous close. The S&P 500, which is centered on large-cap stocks, rose 0.52% to 5,154.61, and the tech-heavy Nasdaq index climbed 0.52% to 16,240.76.

Berkshire Hathaway, led by 'investment genius' Warren Buffett, was up 0.39%. Berkshire Hathaway, which held its annual shareholders meeting on the 4th, reported a 40% increase in operating profit for the first quarter compared to the same period last year. Apple, praised as a good company by Buffett at the annual shareholders meeting, was down 0.57%. Buffett explained that he sold 13% of his Apple shares held in the first quarter this year due to tax-related reasons. Micron surged more than 4% after investment firm Baird upgraded its investment rating from 'neutral' to 'outperform market'.

The cooling labor market indicators are stimulating investor sentiment. According to the April employment report released by the U.S. Department of Labor on the 3rd, nonfarm payrolls increased by 175,000 compared to the previous month, significantly below the Dow Jones consensus forecast of 240,000. The unemployment rate rose 0.1 percentage points to 3.9%, and the weekly wage growth rate slowed to 0.2% month-over-month.

Bill Adams, chief economist at Comerica Bank, said, "The Fed is still keeping rates at a restrictive level, so it is somewhat premature to declare that the U.S. economy has achieved a soft landing," but added, "However, the April employment report helps clarify the path to the destination."

Investor expectations that the possibility of an interest rate cut has not been extinguished are also reviving. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market on the day reflected about a 69% chance that the Fed will cut rates by at least 0.25 percentage points at the Federal Open Market Committee (FOMC) meeting in September, up from about 57% a week ago. The probability of a rate cut of at least 0.25 percentage points in November rose from about 68% to 81% during the same period.

Fed officials are also scheduled to speak on the day, providing investors with additional clues about the future path of interest rates. Richmond Fed President Tom Barkin and New York Fed President John Williams are expected to speak. Additionally, Minneapolis Fed President Neel Kashkari is scheduled to speak on the 7th, and Fed Board member Michelle Bowman and Vice Chair for Supervision Michael Barr are scheduled to speak on the 10th.

Corporate earnings announcements will continue this week. Walt Disney will release its first-quarter earnings on the 7th, and ride-sharing company Uber will report on the 8th.

Emmanuel Ker of investment bank Barclays said, "First-quarter earnings rebounded with the help of profits," and analyzed that "overall earnings resilience is likely to limit downward pressure on stocks."

Government bond yields are slightly declining. The U.S. 10-year Treasury yield, a global benchmark for bond yields, fell 2 basis points (1bp = 0.01 percentage points) from the previous trading day to 4.47%, while the 2-year Treasury yield, sensitive to monetary policy, moved down 1 basis point to around 4.78%.

International oil prices are rising as Saudi Arabia raises crude prices and tensions in the Middle East escalate. West Texas Intermediate (WTI) crude oil traded at $78.73 per barrel, up $0.62 (0.79%) from the previous trading day, and Brent crude, the global oil price benchmark, rose $0.58 (0.7%) to $83.54 per barrel.