NEW YORK, Sept 7 — Wall Street’s major indexes edged higher yesterday as investors digested mixed signals from the US jobs report and bet on a Federal Reserve interest rate cut this month while China’s stimulus plan helped ease some concerns around global growth.
US job growth slowed more than expected in August, with retail hiring declining for a seventh straight month, but this was countered by strong wage gains which are expected to support consumer spending and keep the economy expanding moderately amid rising threats from trade tensions.
Also yesterday, speaking at the University of Zurich, Fed Chair Jerome Powell said the labor market was strong and the central bank will continue to “act as appropriate” to sustain economic expansion. He also said the United States and the world economy are not likely to fall into recession.
“There’s no question momentum in the labor market is waning a little,” said Moira McLachlan, senior investment strategist at AB Bernstein in Miami. “I don’t think there’s anything in there to undermine the case for a rate cut in September.”
Others said the mixed data gave the Fed options.
“If the Fed is bent on becoming more dovish, the jobs data coming in shy of expectations feeds into that narrative and if they want to become more neutral, the wage inflation increasing above expectations strengthens that narrative,” said Keith Buchanan, portfolio manager at Globalt in Atlanta.
Also yesteday, China’s central bank said it would slash the amount of cash that banks must hold as reserves, releasing a total of 900 billion yuan (RM$528.7 billion) in liquidity to shore up the flagging economy.
At 3.04pm ET (3.00am, Saturday Malaysian Time), the Dow Jones Industrial Average was up 81.52 points, or 0.31 per cent, at 26,809.67, the S&P 500 had gained 5.14 points, or 0.17 per cent, to 2,981.14 and the Nasdaq Composite was up 3.17 points, or 0.04 per cent, at 8,120.00.
Of the S&P 500’s 11 major sectors healthcare was the biggest boost with a 0.5 per cent gain. The communication services sector was under pressure as Facebook Inc slipped 1.6 per cent after US state attorneys general said they would investigate if the social media giant stifled competition and put users at risk.
The Labor Department’s nonfarm payroll data showed the economy added 130,000 jobs in August, below expectations for a gain of 158,000, according to a Reuters survey of economists. While average hourly earnings gained 0.4 per cent last month in the largest increase since February, the annual increase dipped to 3.2 per cent from 3.3 per cent in July.
Advancing issues outnumbered declining ones on the NYSE by a 1.50-to-1 ratio; on Nasdaq, a 1.13-to-1 ratio favoured advancers.
The S&P 500 posted 52 new 52-week highs and no new lows; the Nasdaq Composite recorded 57 new highs and 41 new lows. — Reuters
