NEW YORK: Wall Street’s main indexes rose on Thursday after the latest labor market data kept intact expectations of an interest rate cut by the Federal Reserve, while declines in Salesforce limited gains.
US private payrolls increased less than anticipated in August, while weekly jobless claims came in higher than expected, in the latest data pointing to easing labor market conditions.
Investors are still pricing in a 95 percent probability of a 25 basis point cut, CME’s FedWatch Tool showed. The move was largely expected after July’s bleak payrolls figures, Fed Chair Jerome Powell’s dovish comments and a weak job openings report for July.
The focus now shifts to Friday’s highly anticipated nonfarm payrolls data.
“I’m hoping there would be a Goldilocks number where we’re not creating jobs like we were, but we’re also not falling off the cliff,” said Ken Mahoney, president of Mahoney Asset Management.
“The Fed figured out that if they had to fix something in their dual mandate, the best thing for the overall economy is making sure companies are not laying off more people.”
Separately, the Institute for Supply Management’s index showed US services sector activity picked up in August.
Meanwhile, Salesforce fell 5.5 percent after it forecast third-quarter revenue below Wall Street estimates on Wednesday, signaling lagging monetization for its AI agent platform.
While AI-linked companies have driven US stock indexes to record highs this year, their momentum slowed last month on concerns over valuations and results from bellwether Nvidia which fell short of heightened expectations. On Thursday, Amazon.com gained 3.3 percent, while Meta Platforms jumped 1.8 percent, boosting the consumer discretionary and communication services sectors.
At 12:02 p.m. ET, the Dow Jones Industrial Average rose 215.80 points, or 0.47 percent, to 45,486.03, the S&P 500 gained 24.87 points, or 0.38 percent, to 6,473.01 and the Nasdaq Composite gained 62.37 points, or 0.29 percent, to 21,560.10. Investors watched President Donald Trump’s nominee, Stephen Miran’s, Senate confirmation hearing for an open Fed board seat, where he assured he was not asked to commit to rate cuts if confirmed.
Wall Street had a dour start to September, pressured by rising Treasury yields. The month has been historically bad, with the S&P 500 losing 1.5 percent on average since 2000, according to LSEG data.
The S&P 500 and the Nasdaq closed higher on Wednesday, boosted by Google-parent Alphabet hitting a record high after a Washington judge ruled the company would not have to sell its Chrome browser. The stock fell 1.2 percent on Thursday.
Market participants will also parse Fed official Austan Goolsbee’s comments later in the day. Central bank officials had said on Wednesday that labor market worries continued to animate their belief that rate cuts still lay ahead.