Friday, August 7


The weaker-than-expected employment report strengthened expectations that the Federal Reserve could have more room before increasing interest rates to curb inflation.

US stock market today: Wall Street stocks traded higher on Friday morning, while Treasury yields declined after government data showed US employers unexpectedly eliminated 23,000 jobs last month.The S&P 500 advanced 0.4%, remaining close to the record high it reached on Tuesday. By 9:55 a.m. Eastern time, the Dow Jones Industrial Average had gained 114 points, or 0.2%, while the Nasdaq composite climbed 1%. All three major indexes were headed for weekly gains.Large-cap technology companies provided much of the market’s upward momentum, reflecting their significant influence on the broader indexes. Nvidia rose 1.3%, while Broadcom added 1.1%, according to an AP report.The response in the bond market was more pronounced, as the weaker-than-expected employment report strengthened expectations that the Federal Reserve could have more room before increasing interest rates to curb inflation.The yield on the benchmark 10-year Treasury note declined to 4.63% from 4.67% immediately before the employment data was released. The two-year Treasury yield, which is more sensitive to expectations surrounding Federal Reserve policy, fell to 4.19% from 4.22%.Taken together, the latest employment figures suggest a weaker labour market than previously believed. Until now, hiring had been one of the stronger parts of the economy despite rising inflation and growing concerns over household spending. The report also included downward revisions to payroll data for May and June, reducing employment by a combined 103,000 jobs.The Federal Reserve has kept interest rates unchanged because of concerns that inflation could remain elevated, particularly after oil prices climbed following the US war with Iran. Investors on Wall Street continue to expect at least one interest rate increase before the end of the year. However, signs of a softer labour market complicate the Fed’s task of balancing inflation control with support for employment.Higher interest rates are used to slow economic activity and ease inflationary pressures. At the same time, increasing borrowing costs can place additional strain on a weakening labour market by making it more difficult for businesses to expand.Businesses and financial markets generally favour lower interest rates because cheaper borrowing can encourage investment. While that could provide support to a slowing labour market, it also risks adding to inflation that has already proved difficult to bring down.Oil prices moved slightly lower, with Brent crude, the international benchmark, slipping 0.6% to $82.07 a barrel.European equity markets traded higher, while Asian markets finished the session with mixed performances.



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