US markets ended the past week largely back where they started with jobs growth impressive despite the obvious challenges firms are facing in finding suitable workers, pushing up pay pressures.
Investors will worry that this remain a cocktail which will keep inflation higher for longer and support the view that the Fed is set to embark on a series of 50 basis point rate hikes through to the summer.
The US added 431,000 jobs in March, below the 490,000 expected, although that figure had been previously raised. ‘This is undoubtedly strong,’ said Janet Mui, head of market analysis at wealth manager Brewin Dolphin. ‘With job openings elevated, we are looking at more jobs available than the number of unemployed.’
‘Only in 2020, when the pandemic was distorting the data, was the number any higher,’ said Seema Shah, chief strategist at Principal Global Investors.
Put another way, it looks like the US economy is fast returning to where it was before the pandemic which is something to be grateful for. But inflation remains a threat with sharp teeth and it now seems a question of how fast the Fed raises rates, with Neil Birrell, chief investment officer at Premier Miton Investors convinced that these latest figures ‘probably inks in a 0.5% rate hike at the Fed's next meeting.’
Elevating fears over neon gas and supply chain issues from the ongoing Russia-Ukraine standoff has kept the rally in semiconductor stocks under the run that the S&P 500 has seen. Equity markets are likely to remain choppy, but many market analysts believe that slower growth in semiconductor stocks continues to defy valuations, and the segment's fundamental prospects, emphasised by the past week's 9% plunge in Advanced Micro Devices' share price.
GAMESTOP
Doing the splits has become fashionable for retail investor favourites with popular meme stock GameStop the latest to propose splitting its shares in a bid to ease liquidity issues for retail investors. The plan would be to increase its outstanding Class A common shares to one billion from the current 300 million.
That GameStop's share price jumped around 19% in after-hours trading on Thursday will give ammunition to those that believe stocks splits are just another way to get a short-term bump in the price - Amazon rallied 5% on 9 March 2022 after unveiling its own stock split plans. Google-owner Alphabet is also hoping to split its stock while Tesla said in the past week that it is planning its second in two years after its astonishing run from $80 to over $1,000 since 2020.
PAYPAL
PayPal has lost a lot of stock market supporters since the middle of 2021 as worries emerged about possible large M&A and intensifying competition, but analysts at Goldman Sachs remains in its corner. The investment bank initiated coverage on the financial technology company over the past week with forecasts of a return to 20%-plus earnings growth once 2022 is behind it on the back of higher adoption of digital payments. PayPal has endured the toughest first quarter of 2022 than any member of the Nasdaq 100, down 38%, and July 2021 $300 peaks seem an eternity ago.
APPLE
Winning an Academy Award is a pretty good way to start a week and Apple became the first streaming content provider to win an Oscar, beating Netflix to the title, no doubt to the latter's chagrin. Apple's movie Coda won three awards, including best picture, and apparently lifted Apple TV viewers by 25%, according to some reports. Apple's Oscar victory lifted the shares, but analysts remain worried about issues closer to its iPhone money-making machine. The company's decision to cut production of its low-cost phone model SE due to a lack of demand in the consumer electronics market is something that many investors may want to watch closely.
