On Friday, US equity indexes staged a recovery after a tumultuous start, reversing previous declines as Federal Reserve Chair Jerome Powell indicated that policymakers are poised to wait for clearer signals regarding government policies. He made it clear that the rate-setting committee remains ready to act if necessary.
The Nasdaq Composite increased by 0.2%, reaching 18,104.3, while the S&P 500 also rose by 0.2% to 5,747.6. Meanwhile, the Dow Jones Industrial Average saw a 0.3% uptick, closing at 42,686.8. Earlier in the session, all three indexes had been in negative territory. Leading the intraday gainers were sectors such as energy and utilities, whereas consumer discretionary and financial sectors lagged behind. Powell reminded investors that monetary policy is flexible and can adjust based on evolving conditions.
He noted that trade tariffs could impact prices in certain sectors, although their long-term effects remain unclear. “If the economy remains strong, but inflation does not sustainably trend toward 2%, we can maintain policy restraint for longer,” Powell stated. “Conversely, if the labor market were to weaken unexpectedly or inflation falls more quickly than anticipated, we can ease policy as needed.” According to a report from the Bureau of Labor Statistics, nonfarm payrolls increased by 151,000 in February, while the consensus expectation was a rise of 160,000, based on a Bloomberg survey.
The unemployment rate climbed to 4.1%, up from January's 4%, which was aligned with market expectations. John Blank, Chief Economist at Zacks Investment Research, noted in a client communication that the jobless rate has fluctuated between 4% and 4.2% since May 2024. “Job growth is expected to decelerate in the next few months as federal layoffs tied to the Department of Government Efficiency continue to escalate and ongoing trade policy uncertainty dampens short-term hiring intentions,” commented Thomas Feltmate, Senior Economist at TD Economics. Meanwhile, average hourly earnings were reported to have climbed by 0.3% sequentially, consistent with market expectations, although the annual measure saw a 4% increase, slightly shy of the 4.1% rise analysts were predicting. “Financial markets have grown increasingly wary of slowing growth prospects in recent weeks, with fed futures now fully pricing in three rate cuts of 25 basis points by the end of the year,” Feltmate added. During the trading session, most US Treasury yields moved higher.
The yield on the 10-year note rose by 1.7 basis points to 4.3%, and the two-year rate increased by two basis points, reaching 3.98%. The CBOE's VIX, often referred to as the fear gauge, dipped by 0.1% to 24.83, after experiencing an uptick of approximately 5% prior to Powell's remarks. In the corporate arena, Reuters reported that Pfizer and its collaborator BioNTech infringed on a COVID-19 vaccine patent owned by Moderna.
A German court has reportedly mandated Pfizer and BioNTech to reveal earnings linked to the patent's application and provide compensation to Moderna. This news propelled Moderna’s shares up nearly 5% intraday, making it one of the top performers on the S&P 500. Pfizer stocks climbed nearly 2%, while BioNTech saw a slight decline of less than 1%. The most significant laggard on the index was Hewlett Packard Enterprise, whose shares plummeted nearly 15% intraday following the announcement of its plan to achieve approximately $350 million in run-rate cost savings by fiscal 2027 through workforce reductions. In commodities, West Texas Intermediate crude oil futures soared by 1.1% to $67.06 per barrel.
Gold futures slipped by 0.5% to $2,913.21, while silver futures dipped 1.6% to $32.82..