U.S. equities and stock exchange traded funds were stuck in sideways action as a slightly better-than-expected April jobs report and rebound in energy were offset by a sharp drop in International Business Machines (NYSE: IBM) and the healthcare sector.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), were up 0.1% Friday.
The Labor Department revealed nonfarm payrolls rose by a seasonally adjusted 211,000 in April month-over-month, with unemployment rate falling down to 4.4% from the previous month’s 4.5% to its lowest since May 2007, reports Eric Morath for the Wall Street Journal.
“This is an unambiguously strong economic report and suggests that consumers will have the wherewithal to increase spending in the second quarter,” David Berson, economist at Nationwide Mutual Insurance Co., told the WSJ.
However, the good economic news was offset by weakness in other areas of the market. For instance, after Warren Buffett revealed he sold nearly a third of his stake in IBM, the tech giant’s share’s declined 2.3% to a six-month low, accounting for the largest drag on the blue-chip-focused Dow Index, along with the S&P 500.
The healthcare sector was also slipped 0.4% after the U.S. House of Representatives passed a healthcare overhaul bill Thursday.
Nevertheless, the U.S. markets remain near record levels as a strong earnings season helped support fears of pricey valuations in domestic equities. Around 80% of the S&P 500 companies have revealed their first-quarter reports with 75% beating profit estimates.
“This lackluster behavior is occurring when the market is a stone’s throw away from all-time highs, so it is either going to break out and make new highs or will go into a short corrective phase. Until then, it is a waiting game,” Andre Bakhos, managing director at Janlyn Capital, told Reuters.
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