NAS100 Continues to Hit Record After Employment Rises
By: Eddy Peng Nov 6, 2017
The stock market in the United States kept boosting on Friday amid the release of non-farm payrolls from the Labor Department, which indicated that U.S. employers added the most workers in a year, rebounding from September’s slowdown. Among all three major markets, the NASDAQ 100 Index continued to hit the record high, rising by around 0.61 percent to end up at 6282.8.
The growth in the stock market can be seen to be driven by strong employment statistics, which showed the jobless rate fell as both the number of unemployed and employed declined, shrinking the labor force.
For NASDAQ 100 on Friday, the biggest gainers of the session were MercadoLibre Inc (NASDAQ: MELI), which rose 13.28 percent or 31.35 points to close at 267.35. Qualcomm Incorporated (NASDAQ: QCOM) gained 12.71 percent or 6.97 points to end at 61.81 and Dentsply Sirona Inc (NASDAQ: XRAY) was up 5.95 percent or 3.64 points to 64.80 in late trade.
However, The biggest losers included Discovery Communications C Inc (NASDAQ: DISCK), lost 5.35 percent or 0.87 points to end at 15.39, while Discovery Communications Inc (NASDAQ:DISCA) declined 4.56 percent or 0.79 points to 16.52 and Liberty Global PLC (NASDAQ: LBTYA) shed 3.51 percent or 1.11 points to close at 30.51.
The payrolls’ rising in 261k after 18k for the previous indicates the fallout from the hurricanes, which had been in line with the Fed’s expectations. Jobs bounced back at restaurants and bars, which added 89,000 workers after a 98,000 drop in September.
With average payroll gains of 162k over the past three months, the labor report broadly provided more evidence that the economy is approaching maximum employment, the spot where Federal Reserve policy makers will likely raise interest rates in December for the third time this year. The likelihood of rate hike significantly increases after Jerome Powell was nominated as the next Fed chair, whose policy inclination has been quite line with Trump’s policy.
The Senate finance committee, which is working on its own legislation, is aiming to put out its bill by the end of this coming week. President Donald Trump wants tax reform to be his first major legislative win but if the bill passes the House of Representatives — where success is not guaranteed — Republicans in the US Senate will present more formidable hurdles.
The tax reform will undoubtedly increase corporates’ profits in US, and make their financial statements more impressive. However, it will simultaneously raise the US budget deficit over $1.5 trillion over the next 10 years, according to James Lankford, a Republican senator from Oklahoma. Increasing deficit and debt would be harmful and has adverse impact on the economic sustainability over the near future.
The tax overhaul helps boost both economy and stock market in the short term period. For the broad outlook, however, the path of interest rate hike may be cooling the growth of stock market as more investor will turn to look for increasing return with higher interest rates.
Technically the NASDAQ 100 is already hitting the resistance point, which is presented by the upper price channel line. The index has been still following the developing upward price channel, started from earlier this year. In the event that the index succeeds to break higher, traders may look for rise in the short term. Alternatively if it reverses lower, some retreats may occur in this channel.
Chart 1: NAS100 Daily
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