The stock markets in the United States declined today except the Russell 2000 due to speculations that the Federal Reserve might increase interest rates as early as June this year.
The speculations regarding an earlier-than-expected interest rate hike by the central bank was boosted by the strong labor market data. The Department of Labor reported that the economy added 257,000 jobs in January. The unemployment rate was 5.7%.
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In a statement, Labor Secretary Thomas Perez said, “2015 is picking up right where 2014 left off – with strong, steady, sustained job growth that is leading a dynamic recovery…With sound leadership and smart investments, we can have a strong 2015, while laying the foundation for further growth in the long run.”
RBS Securities economist Guy Berger commented, “If average hourly earnings pick up again in February, in that case a June hike really is on the table.”
On the other hand, Barclays chief economist Michael Gapen emphasized the jobs report strengthened his convictions for a June interest rate hike. He said, “This is a very solid report. It would feed their inclination to say things are pretty robust, we got it going in the right direction and zero is not the right rate.”
In an interview with CNBC, Charles Posser, president of Federal Reserve Bank of Philadelphia said, “We need to be thinking about moving off the zero bound. Our ability to raise rates gradually would be greater if we started sooner.” According to him, the jobs report was very good.
- Dow Jones Industrial Average (DJIA) – 17,824.29 (-0.34%)
- S&P 500- 2,055.47 (-0.34%)
- NASDAQ- 4,744.40 (-0.43%)
- Russell 2000- 1,208.71 (+1.45%)
- EURO STOXX 50 Price EUR- 3,398.16 (-0.32%)
- FTSE 100 Index- 6,853.44 (-0.18%)
- Deutsche Borse AG German Stock Index DAX- 10,846.39 (-0.54%)
- Nikkei 225- 17,648.50 (+0.82%)
- Hong Kong Hang Seng Index- 24,679.39 (-0.35%)
- Shanghai Shenzhen CSI 300 Index- 3,312.42 (-1.62%)
Stocks in Focus
The shares of GoPro declined more than 13% to $47.12 per share despite reporting strong financial results. The stock was negatively impacted by its weak guidance for the first quarter, and the resignation of its COO Nina Richardson.
LinkedIn climbed more than 10% to $263.40 per share after posting quarterly earnings that exceeded the expectations of Wall Street analysts. The professional social network generated earnings of $0.61 on revenue of $643 million compared with the consensus estimate of $0.53 in earnings per share on $617 million revenue.
The stock price of Pandora Media fell more than 17% to $15.24 per share after reporting disappointing quarterly financial results. Its revenue declined 33% to $268 million due to strong competition. Multiple firms downgraded their ratings for the stock.
Yelp plummeted more than 21% to $45.11 per share after reporting its financial performance for the fourth quarter. The company slightly beat earnings expectations, but stock was impacted by the slowdown of its monthly visitors.