Written by Shristi Achar A and Shashwat Chauhan
(Reuters) – The U.S. Federal Reserve said it was in no hurry to cut interest rates after a better-than-expected March jobs report showed labor market resilience. Wall Street's major stock indexes rose on Friday.
Nonfarm payrolls rose by 303,000 in March, compared with the 200,000 expected by economists polled by Reuters, according to a Labor Department report.
The unemployment rate was 3.8%, compared to expectations that it would remain stable at 3.9%, and average wages rose 0.3% on a monthly basis, in line with expectations.
“A key data point…is average hourly wages, which is currently down 4.1% year-over-year, which is the lowest for 2021,” said David Waddell, CEO and chief investment strategist at Waddell & Associates. “This is the lowest level since June.”
“So the jobs report was hot, but the inflation report was cool and that's why the market can digest it. This doesn't really change anything.”
Money markets are now pricing in about a 56% chance that the central bank will cut interest rates by at least 25 basis points in June, down from about 60% before the data was released, according to the CME FedWatch tool.
However, U.S. Treasury yields rose in response to the data, with the 10-year yield hovering at 4.3655%.
Friday's report came after a broad market decline in the previous session, when all three major stock indexes fell more than 1% following hawkish comments from Federal Reserve officials.
Minneapolis Federal Reserve Bank President Neel Kashkari said Thursday that the decision to cut interest rates twice this year at last month's central bank meeting may not be necessary if inflation continues to fall short of the Fed's goals. .
Investors will be looking for further clues on monetary policy from comments from Federal Reserve Bank President Michelle Bowman and Federal Reserve Bank President Rory Logan, who are scheduled to speak that day.
A variety of economic indicators have been mixed this week, including soft service activity reports, strong manufacturing reports, and comments from policy makers, putting pressure on stock prices, with all three indexes on track to decline for the week.
As of 9:39 a.m. ET, the Dow Jones Industrial Average was up 51.48 points, or 0.13%, at 38,648.46, the S&P 500 was up 14.55 points, or 0.28%, at 5,161.76, and the Nasdaq Composite Index was up 41.12 points, or 0.26. Rose. %, 16,090.20.
Ten of the 11 major S&P 500 sectors rose, with the Consumer Discretionary sector leading the way with a 0.4% gain.
Most mega-growth stocks also rose in early trading, with Nvidia, Metaplatform and Amazon.com rising 0.9% to 1.4%.
Krispy Kreme rose 8.5% after Piper Sandler upgraded the donut chain from “neutral” to “overweight.”
Shockwave Medical rose 1.7% after Johnson & Johnson agreed to buy the medical device maker for $12.5 billion.
Declining issues outnumbered advancing issues by a 1.18-to-1 ratio on the NYSE and 1.43-to-1 on the Nasdaq.
The S&P index recorded seven new highs and five new lows in 52 weeks, while the Nasdaq recorded 20 new highs and 61 new lows.
(Reporting by Shristi Achar A and Shashwat Chauhan in Bengaluru; Editing by Shinjini Ganguly)
