Stocks open higher after jobs report didn’t come in too hot
By ALEX VEIGA
AP Business Writer
Stocks rose in early trading Friday after a report showing employers slowed their hiring in August stoked cautious optimism on Wall Street that the Federal Reserve may not need to raise interest rates as aggressively in its ongoing bid to tame inflation.
The S&P 500 was up 0.4% as of 10:09 a.m. Eastern, while the Dow Jones Industrial Average rose 95 points, or 0.3%, at 31,753. The Nasdaq composite gained 0.2%.
The indexes remain on pace to end lower for the week. In recent weeks, the market has wiped out much of the gains it made in July and early August as traders worried that the Fed would not let up anytime soon on raising interest rates to bring down the highest inflation in decades.
The latest jobs data at least gives traders some hope that a key driver of inflation is cooling. On Friday, the Labor Department reported that the U.S. economy added 315,000 jobs last month, down from 526,000 in July and below the average gain of the previous three months. The unemployment rate also rose to 3.7% from 3.5% in July.
The smaller August jobs gain is good news for Wall Street, because it suggests the Fed is making progress on its goal of cooling hiring and wage growth in order to help slow inflation. That could give the central bank reason to more moderately increase interest rates at its next policy meeting later this month.
The Fed has already raised interest rates four times this year and is expected to raise short-term rates by another 0.75 percentage points at its next meeting, according to CME Group. But following the latest jobs report, expectations for that three-quarter percentage point hike have fallen to 64% from 75% on Thursday.
The gains were broad in morning trading Friday. Technology stocks, which weighed on the market heavily most of this week, drove a big share of the rally. Broadcom rose 3.4%. Energy stocks also rose as crude oil prices edged higher. Marathon Oil added 2.9%.
Treasury yields, which have been rising along with expectations for higher interest rates, fell broadly. The yield on the 10-year Treasury, which influences interest rates on mortgages and other consumer loans, slipped to 3.20% from 3.26% late Thursday. The two-year Treasury yield, which tends to track expectations for Fed action, fell to 3.41% from 3.52%.
The benchmark S&P 500 ended August with a 4.2% loss after surging the previous month on expectations the Fed might ease off rate hikes due to signs U.S. economic activity was cooling and inflation might be leveling off.
Stocks entered a skid last week after Chair Jerome Powell said the Fed needs to keep rates elevated enough “for some time” to slow the economy. The only question for many investors is how much and when the next hike will be.
The latest jobs data comes a day after the Labor Department reported unemployment claims fell last week in another sign of a strong job market. It said earlier this week there were two jobs for every unemployed person in July.
Major indexes in Europe were higher. Asian markets closed mixed.
