Nasdaq 100 Drops 1% as Stock Market Rally Encounters Resistance: Market Overview

• Unemployment in the US Reaches a Two-Year High Despite Strong Hiring
• Employment Growth Surpasses Forecasts with 275,000 New Jobs, but Wage Increases Slow Down

The stock market retreated from its recent surge, which saw record highs, as investors processed a mix of employment data. The S&P 500 saw declines, particularly within the technology sector, its most influential segment. Following a significant 35% increase since last year, there have been cautionary signals regarding a possible market consolidation. The Nasdaq 100 experienced a 1% decrease. Notable companies like Nvidia Corp. saw an end to their winning streaks, Tesla Inc. continued its decline by 13% for the week, and Broadcom Inc. experienced a downturn due to reduced chip sales.

Friday’s employment report indicated ongoing job growth without triggering wage inflation, sparking optimism that the Federal Reserve might manage a gentle economic downturn and potentially relax policies later this year without premature action. Two-year Treasury yields dropped slightly to 4.49%, with expectations of a Federal Reserve rate cut in June nearly fully priced by traders. The dollar was on track for its most extended period of losses since October, while gold reached new highs and Bitcoin briefly surged to $70,000. The US jobless rate increased to a two-year peak in February, although job creation remained strong, indicating a cooling but stable job market.

Nonfarm payrolls rose by 275,000, adjusting for a downward revision of 167,000 in the previous months. The unemployment rate climbed to 3.9%, and wage growth decelerated.

Corporate Highlights:

• A United Airlines Holdings Inc. ( $UAL) flight veered off the taxiway into a grassy area in Houston, marking the third significant incident this week involving Boeing Co. aircraft.
• Taiwan Semiconductor Manufacturing Co. ( $TAM) is expected to receive over $5 billion in federal subsidies for a chip manufacturing initiative in Arizona, highlighting a key achievement in President Joe Biden’s campaign to bolster US semiconductor production.
• Eli Lilly & Co.’s ( $LLY) Alzheimer’s medication, donanemab, encounters further approval delays as the FDA plans a review by external advisers to assess the drug’s efficacy and safety.
• Gap Inc. ( $GPS) reported earnings above forecasts for the fourth quarter, indicating progress in the company’s revival efforts.
• Huawei Technologies Co. and Semiconductor Manufacturing International Corp. reportedly used US technology last year to create an advanced semiconductor in China.
• Novo Nordisk A/S ( $NVO) anticipates a reduction in Wegovy’s price as the weight loss drug becomes more accessible through insurance and healthcare systems, according to CEO Lars Fruergaard Jorgensen, aiming for widespread adoption.