The US market closed higher on Friday, rebounding after spending much of the session in the red, as investors grappled with the jobs report and its ramifications for Federal Reserve’s monetary policy. The main indexes booked their second consecutive weekly losses, as poor economic reports have raised concerns about domestic growth. The oil prices had a choppy time amid lingering speculation about the potential impact on supply of the devastating wildfire in Canada’s oil sands region. On the economy front, companies scaled back hiring in April, adding just 160,000 new jobs, in a sign the US economy is still suffering from an early-year chill. The disappointing employment report is likely to keep the Federal Reserve from raising interest rates anytime soon. Hiring has tapered off in 2016 in tandem with a broader economic slowdown, while falling corporate profits has sparked worries about whether companies will take down their help wanted signs. The increase in hiring was the smallest since September. Job creation has slowed to an average of 200,000 in the last three months from a five-year high of 282,000 a month in the fourth quarter. The unemployment rate remained flat at 5%, but more people dropped out of the labor force and the so-called participation rate fell for the first time in seven months. That could mean people find it a bit harder to get a job. In a bit of good news, average wages rose again to $25.53 an hour. Hourly pay has increased 2.5% in the past 12 months, up from 2.3%.
Separately, borrowing by US consumers ballooned in March at the fastest pace in more than a decade. Outstanding consumer credit, a measure of non-real estate debt, rose by a seasonally adjusted $29.67 billion in March from the prior month. The 10.0% seasonally adjusted annual growth rate was the fastest growth pace since November 2001. Consumer credit rose at a 4.78% pace in February, revised down from an earlier estimate. Revolving credit outstanding, mostly credit cards, increased at a 14.16% annual pace in March, the fastest pace since July 2000. Revolving credit rose at a revised rate of 3.72% in February. Non-revolving credit outstanding, including student and auto loans, increased at 8.50% annual pace in March compared with February’s revised 5.17% growth rate.
Meanwhile, Atlanta Fed President Dennis Lockhart stated that he is undecided about whether to support a June interest rate hike. The Atlanta Fed president added that he would like to see continued solid employment reports and a growth picture that is more consistent with the strong labor market. He expects growth over the rest of 2016 will be much better than the weak 0.5% rate in the first quarter. Lockhart enlightened that at the moment, there is disconnect between weak GDP and strong labor market data. It would be good in coming weeks if economic data makes the overall picture more coherent. He would also like to see inflation numbers continue to move in the right direction. New York Fed President William Dudley stated that while the April job gain was a touch softer than people were expecting, he is not putting a lot of weight on the data. Dudley added that two rate hikes this year remained a reasonable expectation. Dudley is a voting member of the Fed’s policy committee and is someone markets pay close attention to as he is seen as a close ally of Fed Chairwoman Janet Yellen.
The Dow Jones Industrial Average was up 79.92 points or 0.45 percent to 17,740.63, Nasdaq gained by 19.07 points or 0.40 percent to 4,736.16 while S&P 500 added 6.51 points or 0.32 percent to 2,057.14.
The Indian ADRs closed mostly in green; Tata Motors was up 0.56%, ICICI Bank was up by 0.14% and Wipro was up 0.04%. On the other hand, Dr. Reddy’s Lab was down 1.28% and HDFC Bank was down 0.01%.
