American stocks jump, yields drop as hopes for a Federal Reserve rate cut bloom
NEW YORK—A gauge of global stocks rallied while Treasury yields fell on Friday after a US payrolls report was softer than anticipated, easing concerns the Federal Reserve would keep interest rates higher for longer.
Nonfarm payrolls rose by 175,000 last month, the lowest since October 2023, and short of the 243,000 estimate of economists polled by Reuters.
The 3.9-percent annual change in average hourly earnings was the smallest since May 2021 and continued a steady decline toward the mid-3 percent range, which policymakers feel is consistent with their 2-percent inflation target.
Recent data on inflation and the labor market had fueled concerns the Fed would be forced to keep rates higher for longer than the market was anticipating, or even raise rates again.
But at the end of its policy meeting on Wednesday, Fed chair Jerome Powell said the next move being a rate hike was unlikely.
“The combination of how Powell characterized the committee’s stance on hikes relative to the data they were getting and then today’s job reports, which was good but not super worrisome, especially on the wage side, it’s setting up for kind of what we thought we had at the end of last year,” said Scott Ladner, chief investment officer at Horizon Investments in Charlotte, North Carolina.
On Wall Street, US stocks rallied, with each of the three major indexes up more than one percent and the Nasdaq leading the advance with a jump of about 2 percent.
Tech was the top performing of the 11 major S&P sectors, getting an additional boost from a jump of about 5.97 percent in Apple, after the iPhone maker reported its quarterly earnings and announced a record $110 billion stock buyback plan.
Of the 397 companies in the S&P 500 that have reported earnings through Friday morning, 76.8 percent have topped analyst expectations, according to London Stock Exchange Group data, compared with the 67-percent beat rate since 1997 and the 79 percent over the past four quarters.
The Dow Jones Industrial Average rose 450.02 points, or 1.18 percent, to 38,675.68; the S&P 500 gained 63.59 points, or 1.26 percent, to 5,127.79; and the Nasdaq Composite gained 315.37 points, or 1.99 percent, to 16,156.33.
For the week, the S&P 500 gained 0.55 percent, the Nasdaq rose 1.43 percent, and the Dow climbed 1.14 percent. —Reuters
