US stocks rose and short-dated Treasuries trimmed earlier losses after weaker-than-expected private jobs data provided evidence the labor market may be starting to cool.
(Bloomberg) — US stocks rose and short-dated Treasuries trimmed earlier losses after weaker-than-expected private jobs data provided evidence the labor market may be starting to cool.
The S&P 500 pushed higher after three consecutive sessions of losses. The tech-heavy Nasdaq 100 climbed as much as 1.3%. Revamped ADP data showed US companies increased headcount at a relatively sluggish pace in August, a metric that the hawkish Federal Reserve will consider when contemplating September’s rate hike.
“We could be at an inflection point, from super-charged job gains to something more normal,” said Nela Richardson, ADP’s chief economist.
Several Fed officials since Friday have reiterated their resolve to tamp down on inflation with aggressive rate hikes. Cleveland Fed President Loretta Mester added to that on Wednesday, making it clear she doesn’t expect the central bank to cut rates next year. The Fed has now ditched its soft landing goal and is instead aiming for a “growth recession,” which would mean a protracted period of meager growth and rising unemployment.
Investors are scouring incoming data for clues on the Fed’s policy path, with August US jobs figures on Friday the next key report.
“What’s clear is that predicting this market is not clean cut,” Angeline Newman, a managing director at UBS Global Wealth Management, said on Bloomberg Television. “We are living in a world where conflicting economic signals are making the path of monetary policy very difficult to determine.”
Oil is heading for a third monthly drop — the longest losing run in more than two years — hampered by the likelihood of slower global growth.
Meanwhile, euro-area inflation accelerated to another all-time high, strengthening the case for the European Central Bank to consider a jumbo interest-rate hike when it meets next week. ECB Governing Council member Joachim Nagel urged a “strong” reaction.
Investors are also contending with mounting friction between Beijing and Taipei after Taiwanese soldiers fired shots to ward off civilian drones and evaluating the latest Chinese data, which indicated factory activity shrank for a second month. Power shortages, a property sector crisis and Covid outbreaks all took a toll.
Here are some key events to watch this week:
- ECB Governing Council members due to speak at event Tuesday through Sept. 2
- China Caixin manufacturing PMI, Thursday
- US nonfarm payrolls, Friday
- UK leadership ballot closes Friday. Winner announced Sept. 5
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Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.6% as of 9:55 a.m. New York time
- The Nasdaq 100 rose 1.2%
- The Dow Jones Industrial Average rose 0.3%
- The Stoxx Europe 600 fell 0.3%
- The MSCI World index fell 0.8%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro fell 0.1% to $1.0003
- The British pound fell 0.4% to $1.1612
- The Japanese yen was little changed at 138.85 per dollar
Bonds
- The yield on 10-year Treasuries advanced two basis points to 3.12%
- Germany’s 10-year yield advanced three basis points to 1.54%
- Britain’s 10-year yield advanced 10 basis points to 2.80%
Commodities
- West Texas Intermediate crude fell 1.5% to $90.28 a barrel
- Gold futures fell 0.6% to $1,726.40 an ounce
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