Stock Market News: Dow Rebounds

The indexes were propelled by labor market data. March’s payrolls, released Friday by the U.S. Bureau of Labor Statistics (BLS), crushed expectations. Wages, with a 4.1% annual gain, came in higher than inflation, although they were slightly lower than they were in the prior month. The unemployment rate dipped slightly.

The BLS data corroborate ADP’s strong labor report from earlier this week. “The fact that the labor market is so strong shows that companies and the economy are adapting to high interest rates,” wrote Glen Smith, chief investment officer, GDS Wealth Management.

The gains, although, hide the week’s pain. All three indexes fell for the week, with the S&P 500 marking its biggest weekly drawdown since earlier this year. The Dow had its worst losing week in about a year, whereas the Nasdaq suffered its worst weekly loss in nearly a month, according to Dow Jones market data.

Markets had a lot to take in this week. Geopolitical tensions have escalated over concerns about conflict between Israel and Iran. Oil prices spiked on Thursday, hitting their highest level since October.

And Federal Reserve officials have offered little clarity on the timeline of interest rate cuts, with some saying there’s a chance of no rate cuts this year.

Yields have also done some damage. The 10-year rose to 4.377% on Friday, the highest closing level for this year. Surging yields lower the value of bonds and dampen the outlook for stocks, as they make it more expensive for the S&P 500 companies to borrow money.

The week’s losses make the latest consumer price index and the producer price index readings–which will be released next week on Wednesday and Thursday, respectively–more important. If they suggest that businesses are raising prices more slowly on average, it could boost the Fed’s confidence in a rate cut, thereby lifting equities.

Super Micro was added to the S&P 500 last month. The company sells high-efficiency servers among other products.

The surge in its stock comes as demand for artificial intelligence—and with it, demand for servers—has increased. In late January, the company raised its fiscal 2024 revenue forecast to a range of $14.3 billion to $14.7 billion, above a prior forecast of $10 billion to $11 billion.

The stock, though, dropped last month following the company’s decision to sell its shares at a discount to support “operations, including the purchase of inventory and other working capital purposes,” Super Micro noted in a filing.

It’s down 5.4% this week, on pace for its worst week since the week ending March 22, when it fell 9%. It’s down three of the last four weeks.