NEW YORK, Sept 1 — Wall Street’s main indexes rose today after a closely watched report showed the unemployment rate rose in August and wage growth slowed, spurring expectations that the Federal Reserve could pause its interest rate hikes.
The Labour Department’s report showed the unemployment rate rose to 3.8 per cent last month against expectations that it would remain unchanged at 3.5 per cent, while wages advanced 0.2 per cent on a monthly basis, moderating from a 0.4 per cent rise in July.
Nonfarm payrolls increased by 187,000 jobs in August, against expectations of 170,000 additions, according to a Reuters poll of economists. Data for July was revised to show 157,000 job additions instead of the 187,000 additions reported before.
Traders’ bets that the Fed will keep rates unchanged in September stood at 93 per cent, while bets of a pause in November rose to 63 per cent after the jobs report, compared with 44.5 per cent a week earlier, according to CME Group’s FedWatch tool.
“The data is pretty mixed. The initial reaction up is because the market has been very focused on not seeing any outliers that suggest rate rises are likely to keep coming,” said Rick Meckler, partner at Cherry Lane Investments.
“I think these numbers probably put the Fed back on path for one more rate rise and then that’s it.”
The payrolls report follows recent data showing a fall in job openings and softer-than-expected private employment growth, both of which signalled weakness in the labour market.
An inflation reading had also supported hopes of the Fed hitting a pause on its market-punishing tightening campaign, pushing the tech-heavy Nasdaq up to a four-week high yesterday.
A survey by the Institute for Supply Management on Friday showed US manufacturing contracted for a tenth straight month in August.
At 10.12am ET, the Dow Jones Industrial Average was up 228.36 points, or 0.66 per cent, at 34,950.27, the S&P 500 was up 25.49 points, or 0.57 per cent, at 4,533.15, and the Nasdaq Composite was up 53.69 points, or 0.38 per cent, at 14,088.66.
Disney and Charter Communications slipped 2.0 per cent and 2.6 per cent, respectively, dragging the broader communication services sector 0.1 per cent lower.
The stocks fell after the two companies traded salvos over their unresolved distribution agreement after channels like ESPN went dark yesterday for customers of Charter’s Spectrum cable service.
Broadcom fell 4.5 per cent as the chipmaker projected current-quarter revenue below expectations on softening enterprise demand.
Dell Technologies surged 21.9 per cent after the personal computer maker raised its annual forecasts for revenue and profit as it benefits from the artificial intelligence boom.
Lululemon Athletica gained 4 per cent after the yogawear maker said yesterday its third quarter was “off to a solid start” and lifted its annual profit and revenue forecasts for a second time.
Walgreens Boots Alliance slipped 2.9 per cent after the pharmacy chain said CEO Rosalind Brewer has stepped down.
Advancing issues outnumbered decliners for a 3.61-to-1 ratio on the NYSE and a 2.70-to-1 ratio on the Nasdaq.
The S&P index recorded 23 new 52-week highs and four new lows, while the Nasdaq recorded 59 new highs and 34 new lows. — Reuters
