NEW YORK, July 7 — Wall Street was higher today after the US economy created far more jobs than expected in June, underscoring labour market strength that could make the case for a third interest rate hike this year despite benign inflation.
Non-farm payrolls increased by 222,000 jobs last month, data from the Labor Department showed, beating economists’ expectations for a 179,000 gain.
Average hourly earnings rose 0.2 per cent in June after gaining 0.1 per cent in May, but fell below the estimated 0.3 per cent.
While the unemployment rate rose to 4.4 per cent from a 16-year low of 4.3 per cent, that was because more people were looking for work, a sign of confidence in the labour market.
“The topline number is quite strong. We saw positive revisions to the previous month and the average for this year is consistent with the average employment per month from last year,” said Michael Arone, chief investment strategist at State Street Global Advisors.
Investors are focused on wage growth and whether spending by consumers will be strong enough to back the Fed’s rate hike plans.
Odds of a rate hike at the Fed’s December meeting stood at 50.6 per cent, according to the CME Group’s FedWatch tool.
Policymakers have taken opposing views on inflation after it retreated below the central bank’s 2 per cent target in May, creating uncertainty over the future path of rate hikes.
Adding to the jitters are bets that the world’s major central banks are moving closer to unwinding their ultra-loose monetary policies.
At 9.33am ET (1333 GMT), the Dow Jones Industrial Average was up 49.53 points, or 0.23 per cent, at 21,369.57, the S&P 500 was up 6.67 points, or 0.27 per cent, at 2,416.42.
The Nasdaq Composite was up 27.33 points, or 0.45 per cent, at 6,116.80.
Ten of the 11 major S&P sectors were higher, with the tech index’s 0.49 per cent rise leading the gainers. The financial index rose 0.47 per cent.
Shares of Bank of America, JPMorgan, Citigroup and Goldman Sachs rose about 0.8 per cent in premarket trading.
Oil fell more than 2 per cent after data showed US production rose last week just as OPEC exports hit a 2017 high. Oil prices are down more than 16 per cent this year, adding to low inflation concerns.
The energy sector fell 0.2 per cent and was the only laggard.
Tesla edged up 0.8 per cent after the luxury electric carmaker won an Australian contract to install the world’s biggest grid-scale battery. Tesla’s shares have fallen about 15 per cent this week following the company’s lower-than-expected deliveries.
Advancing issues outnumbered decliners on the NYSE by 1,468 to 943. On the Nasdaq, 1,366 issues rose and 676 fell. — Reuters
