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Wall Street Looks to End Week Higher 07/02 09:32
U.S. stocks are ticking higher Thursday after the latest update on the job
market suggested the Federal Reserve may feel less pressure to hike interest
rates.
NEW YORK (AP) -- U.S. stocks are ticking higher Thursday after the latest
update on the job market suggested the Federal Reserve may feel less pressure
to hike interest rates.
The S&P 500 rose 0.4% and is on track to close out its best week in nearly
two months. The Dow Jones Industrial Average was up 266 points, or 0.5%, as of
9:35 a.m. Eastern time, and the Nasdaq composite was 0.3% higher.
Stocks got some help from easing Treasury yields in the bond market, which
fell after a report from the U.S. government said employers added 57,000 jobs
to their payrolls last month. That's growth, which is good for the economy, but
it was also short of the 100,000 jobs that economists expected and a slowdown
from May's hiring pace.
The weaker-than-expected result could keep pressure off inflation, which has
been accelerating worldwide because of jumps in oil prices caused by the war
with Iran. And if inflation can slow in upcoming months, now that oil prices
are back below where they were before the war, the Federal Reserve may feel
less need to raise interest rates several times this year.
That would be a relief for investors, who tend to love lower interest rates
because they can give the economy a boost by making it cheaper for U.S.
households and businesses to borrow money and spend. Lower rates also tend to
push upward on prices for stocks and other investments.
The yield on the 10-year Treasury got to 4.50% in the morning, up from the
less than 4% before the war. But after the release of the U.S. hiring data, it
immediately fell back to 4.47%.
The two-year Treasury yield, which more closely tracks expectations for the
Fed, fell more sharply. Traders now see an 80% chance that the Fed and its new
chair, Kevin Warsh, will not raise the federal funds rate at its meeting later
this month. That's up from the 71% chance seen a day earlier, according to data
from CME Group.
"Warsh can wipe his brow," said Brian Jacobsen, chief economic strategist at
Annex Wealth Management. "The labor market isn't overheating. Inflation
expectations are moderating."
Also helping Wall Street was a steadying for some stocks of computer chip
companies. They've been under pressure recently on worries that their stock
prices have shot too high in the frenzy around artificial-intelligence
technology and that all the spending on chips and data centers may not result
in as much profit and productivity growth as hoped.
After U.S. chip companies sank on Wednesday, South Korean chip giants
tumbled even more sharply Thursday and dragged the Kospi index down 7.9%.
That's its worst drop since a 10% plunge a little more than a week ago.
On Wall Street, memory maker Micron Technology's stock rose 2% Thursday and
recovered some of its 10.6% drop from the day before. But Advanced Micro
Devices fell 1.5% to add to its 6.9% loss from Wednesday.
Elsewhere on the U.S. market, the company behind LaCroix sparkling waters
climbed 8.8% after National Beverage said it will pay a special dividend of
$3.25 for each share that investors hold.
In the oil market, prices continued to sink on hopes for negotiations for a
permanent end to the war with Iran. Brent crude, the international standard,
fell 1.2% to $70.68 per barrel.
In stock markets abroad, indexes fell sharply in Tokyo and Shanghai, along
with Seoul. Japan's Nikkei 225 dropped 2.5%, while stocks sank 2% in Shanghai.
Indexes in Europe were stronger, and France's CAC 40 rose 1.5%.
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