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Financial Markets 12/06 09:34
NEW YORK (AP) -- U.S. stocks are ticking higher Friday after data suggested
the job market remains solid enough to keep the economy going, but not so
strong that it raises immediate worries about inflation.
The S&P 500 added 0.3% and was just above its all-time high set on
Wednesday. It's rolling toward the close of a third straight winning week in
what's likely to be one of its best years since the 2000 dot-com bust. The Dow
Jones Industrial Average was 31 points higher, or 0.1%, as of 10:05 a.m.
Eastern time, and the Nasdaq composite climbed 0.6%.
Stocks rose as the latest jobs report sent Treasury yields down and
expectations up among traders that the Federal Reserve will cut interest rates
again at its next meeting in two weeks. While the report showed U.S. employers
hired more workers than expected last month, it also said the unemployment rate
unexpectedly ticked up to 4.2% from 4.1%.
"This print doesn't kill the holiday spirit and the Fed remains on track to
deliver a cut in December," according to Lindsay Rosner, head of multi-sector
investing within Goldman Sachs Asset Management.
The Fed began easing its main interest rate from a two-decade high in
September to offer more help for the slowing job market, after bringing
inflation nearly all the way down to its 2% target. Lower interest rates can
ease the brakes off the economy, but they can also offer more fuel for
inflation.
Expectations for a series of cuts from the Fed have been a major reason the
S&P 500 has set an all-time high 56 times so far this year. And the Fed is part
of a global surge: 62 central banks have lowered rates in the past three
months, the most since 2020, according to Michael Hartnett and other
strategists at Bank of America.
Still, the jobs report may have included some notes of caution for Fed
officials underneath the surface.
Scott Wren, senior global market strategist at Wells Fargo Investment
Institute, pointed to average wages for workers last month, which were a touch
stronger than economists expected. While that's good news for workers who would
always like to make more, it could also keep upward pressure on inflation.
"This report tells the Fed that they still need to be careful as sticky
housing/shelter/wage data shows that it won't be easy to engineer meaningfully
lower inflation from here in the nearer term," Wren said.
So, while traders are betting on a 90% probability the Fed will ease its
main rate in two weeks, they're much less certain about how many more cuts it
will deliver next year, according to data from CME Group.
For now, the hope is that the job market can help U.S. shoppers continue to
spend and keep the U.S. economy out of a recession that had seemed inevitable
after the Fed began hiking interest rates so swiftly to crush inflation.
Several retailers offered encouragement after delivering
better-than-expected results for the latest quarter.
Ulta Beauty rallied 11.8% after topping expectations for both profit and
revenue. The opening of new stores helped it boost its revenue, and it raised
the bottom end of its forecasted range for sales over this full year.
Lululemon stretched 15.8% higher following its own profit report. It said
stronger sales outside the United States helped it in particular, and its
earnings topped analysts' expectations.
Retailers overall have been offering mixed signals on how resilient U.S.
shoppers can remain amid the slowing job market and still-high prices. Target
reported sluggish sales in the latest quarter and giving a dour forecast for
the holiday shopping season, for example. It followed Walmart, which gave a
much more encouraging outlook.
A report on Friday suggested sentiment among U.S. consumers may be improving
more in December than economists expected. The preliminary reading from the
University of Michigan's survey hit its highest level in seven months. The
survey found a surge in buying for some products as consumers tried to get
ahead of any possible increases in price due to higher tariffs that
President-elect Donald Trump has threatened.
In tech, Hewlett Packard Enterprise jumped 9.7% for one of the S&P 500's
larger gains after reporting stronger profit and revenue than expected. Tech
stock broadly were one of the main reasons for the S&P 500's climb this past
week, as Salesforce and other big companies talked up how much of a boost
they're getting from the artificial-intelligence boom.
In the bond market, the yield on the 10-year Treasury yield fell to 4.13%
from 4.18% late Thursday.
In stock markets abroad, France's CAC 40 rose 1.2% after French President
Emmanuel Macron announced plans to stay in office until the end of his term and
to name a new prime minister within days. It came after far-right and left-wing
lawmakers approved a no-confidence motion due to budget disputes, forcing Prime
Minister Michel Barnier and his cabinet to resign.
In Asia, stock indexes were mixed. They rallied 1.6% in Hong Kong and 1% in
Shanghai ahead of an annual economic policy meeting scheduled for next week.
South Korea's Kospi dropped 0.6% as South Korea's ruling party chief showed
support for suspending the constitutional powers of President Yoon Suk Yeol
after he declared martial law and then revoked that earlier this week. Yoon is
facing calls to resign and may be impeached.
Bitcoin was sitting around $99,000 after briefly bursting above $103,000 to
a record the day before.
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AP Writers Matt Ott and Zimo Zhong contributed.
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