EQUITY NEWS: Earnings, M&A boost stocks with Pfizer’s $5.4 drug deal, oil below $90

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Symbol Price To change %To change
Me: DJI $32,803.47 76.65 0.23
SP500 $4,145.19 -6.75 -0.16
I: COMP $12,657.55 -63.03 -0.50

US stocks rose early Monday morning after finishing nearly flat on Friday following a surprisingly strong jobs report that cast doubt on the Federal Reserve’s ability to walk away from interest rate hikes anytime soon.

The S&P 500 and Nasdaq Composite have now risen for three consecutive weeks, erasing a substantial portion of their losses from the rest of the year. The S&P 500 fell 6.75 points, or 0.2%, to 4,145.19 on Friday, reversing most of its losses from the start of the trading day. For the week, it rose 0.4%. The Dow Jones Industrial Average rose 76.65 points, or 0.2%, to 32,803.47 and fell 0.1% for the week. The Nasdaq Composite fell 63.03 points, or 0.5%, to 12,657.55 and was up 2.2% for the week.

Investors had come to widely believe that the Fed could turn to an interest rate cut as early as the first half of 2023, given signs of slowing activity across the economy. That would have been a balm for markets, which have fallen this year as the Fed quickly raised interest rates to combat stubbornly high inflation.

However, Friday’s data showed that the labor market was anything but cooling. The labor market added 528,000 jobs in July, more than double what analysts had estimated and bringing payrolls back to pre-pandemic levels. Meanwhile, the jobless rate fell to 3.5%, near historic lows.

This left investors with a mixed picture: a key pillar of the economy remains strong, which should be good news for markets. But strong data means the rate hikes that have dragged down stock and bond prices this year aren’t likely to go away any time soon.

It also raises questions about whether stocks can continue their recent comeback. Markets were also rattled by Russia’s war on Ukraine, which has sent oil, wheat and other commodity prices soaring, and uncertainty over China’s anti-virus measures which have disrupted manufacturing and shipping.

Higher interest rates are supposed to dampen inflation by cooling business activity, but it also increases the risk of recession and job losses. The latest inflation spike is unusual as forecasters blame shortages of goods due to the coronavirus pandemic, rather than rapid economic growth.

Meanwhile, Asian stocks were mixed on Monday after strong U.S. jobs data paved the way for further interest rate hikes and Chinese exports rose by double digits.

Shanghai and Tokyo advanced while Hong Kong and Seoul retreated.

The Shanghai Composite Index rose 0.2% to 3,233.07 after China’s July exports beat forecasts. Exports in July jumped 18% from a year earlier while imports rose just 2.3%, reflecting weak global demand, data from China Customs showed on Sunday. The country’s global trade surplus reached a record $101 billion.

The Hang Seng in Hong Kong fell 0.8% to 20,040.21 while the Nikkei 225 in Tokyo gained 0.2% to 26,230.90. Seoul’s Kospi gained less than 0.1% to 2,491.91 and Sydney’s S&P-ASX 200 lost less than 0.1% to 7,009.80. The Indian Sensex opened 0.4% higher at 58,613.39. Markets in New Zealand and Southeast Asia declined.

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