The stock markets in the United States gained driven by the statement of a Federal Reserve official regarding the policy on interest rates after the jobs report last week.
William Dudley, president of the Federal Reserve Bank of New York, said the speed of interest rate hike will probably “shallow” once the central bank starts its tightening. He added that the recent weakness in the economy was caused by temporary conditions.
In his prepared remarks, Dudley said, “It will be important to monitor developments to determine whether the softness in the March labor market report evident on Friday foreshadows a more substantial slowing in the labor market than I currently anticipate.”
Last Friday, the Department of Labor reported that the economy added 126,000 jobs, the least since 2013. The unemployment rate remained at 5.5%. U.S. Labor Secretary Thomas Perez said, “While March’s numbers aren’t as robust as we’ve seen over the last year, overall trends remain solid, and there is every reason to be optimistic about our economic trajectory going forward.”
Federal Reserve Chairperson Janet Yellen previously stated that the interest rates are expected to increase this year, and succeeding increases will be gradual. The first interest rate hike will be dependent on economic data.
In an interview with Bloomberg, Chad Morganlander, a money manager at Stifel Nicolaus & Co. commented that some of Dudley’s statements are dovish, which “put a floor on the overall market.” He added, “Market speculators and economists had time to absorb the news, and they believe that much of the data has been somewhat transitory in nature.”
On the other hand, Robert Pavlik, chief investment strategist at Boston Private Wealth said, “You’re seeing strength in the more-shorted stocks because when the market gets a little bit of a positive feeling, it prompts investors to cover those shorts. There’s a little bit of a squeeze going on.”
- Dow Jones Industrial Average (DJIA) – 17,883.32 (+0.68%)
- S&P 500- 2,080.32 (+0.67%)
- NASDAQ- 4,917.32 (+0.62%)
- Russell 2000- 1,259.95 (+0.34%)
- EURO STOXX 50 Price EUR- 3,715.27 (+0.01%)
- FTSE 100 Index- 6,833.46 (+0.35%)
- Deutsche Borse AG German Stock Index DAX- 11,967.39 (-0.28%)
- Nikkei 225- 19,397.98 (-0.19%)
- Hong Kong Hang Seng Index- 25,275.64 (+0.77%)
- Shanghai Shenzhen CSI 300 Index- 4,170.54 (+1.11%)
Stocks in Focus
The stock price of Tesla Motors increased more than 6% to $203.10 per share after the company reported solid vehicle sales during the first quarter of 2015. The company delivered 10,030 vehicles, a 55% increase from its deliveries during the same period a year ago.
Baird analyst Ben Kallo reiterated his Outperform rating and $275 price target for Tesla shares. Kallo said, “We see a string of positive catalysts ahead. We would be buyers and TSLA remains our favorite pick.”
The shares of Uniqure surged more than 47% to $33.61 per share after entering a partnership agreement with Bristol-Myers Squibb. The company agreed to provide Bristol-Myers exclusive access to its gene therapy technology platform for multiple targets in cardiovascular diseases.
Transocean gained more than 10% to $16.51 per share after announcing its decision to scrap its GSF Aleutian Key and Sedco 707 rigs, which are classified as held for sale. The company expects to record a non-cash charge of around $90 million to $119 million in the first quarter of 2015. Transocean will scrap total of 18 floaters as it continues to evaluate the competitiveness of its fleet over the long-term.