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US stocks rise as weak jobs report eases Fed rate hike concerns
Fed rate hike deadlines
The U.S. stock market experienced gains as the latest jobs report showed a weaker-than-expected increase of 73,000 new jobs, significantly below the forecast of 100,000. This development has led to reduced concerns over immediate interest rate hikes by the Federal Reserve, with market participants now seeing a lower likelihood of a rate hike in July. The unemployment rate edged up to 4.2%, and average hourly earnings saw a modest increase, suggesting a cooling labor market. Major indices like the S&P 500, Dow, and Nasdaq saw intraday gains, driven by strong performances in chip stocks and utilities.
The jobs report appears to have shifted market expectations, with the probability of a rate hike at the Federal Reserve’s July meeting now at a low 9.2% from 21% earlier. Meanwhile, the likelihood of a September hike sits at 28.5%, reflecting a drop from 36% as observed 24 hours prior. These movements suggest that participants are reassessing the Federal Reserve’s potential actions in light of the softer economic data, which may support the “pause” narrative for the immediate future.
Key Takeaways
- The softer jobs report appears to have reduced concerns about immediate Fed rate hikes, with July odds dropping significantly.
- Market pricing suggests a lowered probability of a rate hike by September, consistent with the latest jobs data.
- Stock market gains were led by chip stocks and utilities, reflecting a positive response to the diminished rate hike fears.
What to Watch
Market participants will closely monitor upcoming economic indicators, such as inflation data and consumer spending, for further clues on the Federal Reserve’s policy trajectory. Statements and minutes from the Federal Open Market Committee (FOMC) meetings could provide additional insights into the likelihood of future rate hikes. Any significant changes in labor market conditions or Fed communications could alter current expectations around interest rate adjustments.
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