Wall St rises after mixed jobs report

Wall Street’s main indexes have risen as cooling wage growth and a tick up in the unemployment rate solidified expectations that inflation may be easing and renewed hopes that the Federal Reserve may have to be less aggressive in raising rates.

The Labor Department’s closely watched employment report showed non-farm payrolls increased by 315,000 jobs last month compared with expectations of 300,000. Average hourly earnings rose 0.3 per cent compared with estimates of 0.4 per cent.

Meanwhile, the unemployment rate edged up to 3.7 per cent from a pre-pandemic low of 3.5 per cent.

“The report was a step in the right direction, but it wasn’t a giant leap in that direction,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments in Milwaukee, Wisconsin.

“So on the margin it shifts the balance towards a 50 basis point hike instead of 75 basis point, but the key thing will be of course the inflation data. That will probably seal the deal as to whether it should be 50 or 75 basis point.”

Traders pared their bets on a third straight 75 basis points rate hike in September to 62 per cent from 70 per cent before the jobs report was released, according to CME Fedwatch tool.

Wage growth data is seen as important to the Fed’s deliberations on increasing interest rates as the central bank looks to cool down labour demand and the overall economy to bring inflation back to its two per cent target.

The focus now turns to the August consumer price report due mid-month.

Fears of aggressive policy tightening have gripped Wall Street since Fed Chair Jerome Powell’s hawkish remarks last Friday about keeping monetary policy tight “for some time”, with the S&P 500 sliding 5.1 per cent since.

All the three main indexes are set for a third straight weekly loss.

In early trading on Friday, the Dow Jones Industrial Average was up 142.99 points, or 0.45 per cent, at 31,799.41, the S&P 500 was up 21.36 points, or 0.54 per cent, at 3,988.21, and the Nasdaq Composite was up 44.49 points, or 0.38 per cent, at 11,829.61.

All the S&P 500 sectors rose in early trading, with energy stocks up 1.6 per cent as oil prices gained more than $2 a barrel ahead of OPEC+ meeting to discuss production cuts.

Banks gained 1.1 per cent, led by a 1.4 per cent rise in shares of Bank of America.

Rate-sensitive technology and growth stocks were mixed. Shares of Amazon.com, Microsoft Corp and Apple Inc, which suffered the brunt of the recent sell-off, rose between 0.3 per cent and 0.8 per cent.

The CBOE volatility index, also known as Wall Street’s fear gauge, fell to a one-week low of 24.16 points.

Advancing issues outnumbered decliners by a 2.76-to-1 ratio on the NYSE and by a 1.31-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and one new low, while the Nasdaq recorded 32 new highs and 46 new lows.