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Stocks rose on Wednesday as investors digested weak jobs data.
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Private sector payrolls increased by 152,000 last month, below expectations.
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Investors are confident that two rate cuts will come in 2024, according to the CME FedWatch tool.
U.S. stocks rose on Wednesday as traders digested a weak jobs report and raised hopes of a Federal Reserve interest rate cut later this year. All three major stock indexes rose, while long-term Treasury yields fell.
The 10-year Treasury note continued to fall on Wednesday, down 2 basis points to 4.308%.
Private sector payrolls added less than expected last month. ADP reported that payrolls rose by 152,000 in May, compared with economists’ expectations of 1.75 million, while annual wage growth was flat at 5%, both encouraging signs that the job market is cooling.
The weakening employment trends are good news for the outlook for rate cuts, as central bankers have said they are looking for further signs that economic activity is slowing before easing monetary policy.
Investors will be keeping an eye on Friday’s closely watched nonfarm payrolls report, which is expected to show employers added around 175,000 jobs last month, while Bank of America said it expects 200,000 jobs and the unemployment rate to fall to 3.8%.
“The Fed’s ability to ease policy this year will depend on its confidence in inflation. We continue to expect the first rate cut in December, followed by four further cuts of 25 basis points each through 2025,” Bank of America analysts wrote in a note on Wednesday.
Investors largely expect the Fed to keep rates on hold at its next policy meeting, but remain bullish on a rate cut before the end of the year: The market sees a 60% chance that the Fed will cut rates by 50 basis points or more by the end of the year, according to the CME FedWatch tool.
Below are U.S. stock indexes as of the start of trading at 9:30 a.m. on Wednesday.
What else is happening today:
Commodities, Bonds and Cryptocurrencies:
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West Texas Intermediate crude rose 0.82% to $73.85 a barrel, while the international benchmark Brent crude rose 0.77% to $78.12 a barrel.
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Gold rose 0.51% to $2,339.99 per ounce.
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The yield on the 10-year Treasury note fell 1 basis point to 4.32%.
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Bitcoin rose 2.89% to $71,012.
Read the original article on Business Insider
