NEW YORK: US stocks opened higher Wednesday, buoyed by private sector hiring data that will likely fuel calls for the Federal Reserve to consider interest rate cuts to boost the economy.
Private sector figures published by ADP on Wednesday showed that employers added 152,000 jobs last month, down from a revised 188,000 figure in April and less than analysts anticipated.
The US central Bank, which has a dual mandate to maximise sustainable employment and ensure stable prices, is likely to view this data as evidence that the labor market is softening.
Wall Street slips in choppy trading
This could boost the chances that policymakers will move sooner to cut interest rates from their current 23-year highs.
Around 10 minutes into trading, the Dow Jones Industrial Average was trading up 0.1 percent at 38,737.88, while the broad-based S&P 500 was 0.3 percent higher at 5,309.26.
The tech-heavy Nasdaq Composite Index rose the most of the three major Wall Street indexes, sitting 0.7 percent higher at 16,972.83.
“If you have fewer people working, that could imply an increase in the unemployment rate,” Steve Stovall from CFRA told AFP, responding to the private sector hiring data.
A higher unemployment rate would, he said, “give investors an idea that the economy is slowing, that more and more people will not be getting salaries with which to chase after increasingly expensive goods.”
“That would bring down inflation and increase the likelihood that the Fed will be able to start cutting rates later this year,” he added. “So bad is good.”
Amid a number of weaker-than-expected data releases, futures traders have in recent days raised their expectations of a rate cut by mid-September, according to data from CME Group.
Among individual stocks, tech company Hewlett Packard was trading up 15 percent after beating earnings expectations.
Bath & Body Works was trading up more than four percent a day after the firm’s shares plunged on underwhelming earnings guidance.
Comments
Comments are closed.