US: Wall Street ends higher as economic data fuels rate-pause bets
THE S&P 500 and Nasdaq closed higher on Wednesday as fresh economic data signaled a cooling US economy, reinforcing expectations the Federal Reserve will pause rate hikes in September.
The S&P 500 index reached its highest in nearly three weeks after an ADP National Employment report showed private payrolls increased by 177,000 jobs in August, compared with estimates of 195,000, suggesting a softening labour market.
Fresh gross domestic product numbers showed the US economy expanded 2.1 per cent in the second quarter, slower than a preliminary estimate of a 2.4 per cent growth.
“Somewhat softer employment data is easing investor concerns for future Federal Reserve interest rate hikes,” said Rob Haworth, a senior investment strategist at US Bank Wealth Management.
The prospect of a “softer landing” for the US economy also supported demand for growth stocks and other riskier assets at the expense of defensive stocks, Haworth added.
Mastercard and Visa gained after a report said the companies were preparing to raise credit card fees.
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HP Inc tumbled after the personal computer maker trimmed its annual forecast due to slowing demand.
Traders’ bets on the Fed leaving interest rates unchanged in September stood at nearly 89 per cent, up from 86 per cent the day before, while bets of a pause in November rose to 54 per cent from about 52 per cent, the CME Group’s FedWatch tool showed.
US Treasury yields slipped to a near three-week low, with the 10-year yield last at 4.12 per cent.
Unofficially, the S&P 500 climbed 0.39 per cent to end the session at 4,515.00 points.
The Nasdaq gained 0.54 per cent to 14,019.31 points, while Dow Jones Industrial Average rose 0.11 per cent to 34,890.77 points.
Chipmaker Nvidia, Alphabet and Apple gained.
Investors are now looking to the personal consumption expenditures price index, the Fed’s preferred measure of inflation, and non-farm payroll numbers due on Thursday and Friday, respectively, for more clues on interest rates.
Trading activity has been light this week ahead of the US Labour Day holiday on Monday. REUTERS
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