By Amruta Khandekar and Shristi Achar A
(Reuters) -Wall Street’s main stock indexes gained on Friday after data pointing to slowing job growth and an uptick in the unemployment rate boosted investor expectations that the Federal Reserve was done with its monetary policy tightening campaign.
The Labor Department’s report showed nonfarm payrolls increased by 150,000 jobs in October, against expectations of a 180,000 increase, partly due to strikes at Detroit’s Big Three automakers.
Data for the last month was revised lower to show an increase of 297,000 instead of the 336,000 reported previously, while the unemployment rate edged up to 3.9%.
The reading bolstered the view that the Fed had reached the end of its rate hikes.
Such hopes, coupled with upbeat earnings reports, have put all three major Wall Street indexes on course for their biggest weekly percentage gain in about a year.
“The next discussion is, when do they (the Fed) cut rates? That got taken out of 2024 and it looks now like it’s being priced back in,” said Paul Nolte, senior wealth adviser and market strategist for Murphy & Sylvest Wealth Management.
“The Fed’s focus right now is strictly on inflation. The economy is weakening and their hope is that weakening will filter through to inflation.”
Traders’ bets that the Federal Reserve would hold interest rates steady in December rose to 95.4% from around 83% before the data, while pricing in a rate cut possibility in May against expectations in June earlier.
Treasury yields continued to slide after the report, with the benchmark 10-year Treasury yield falling to its lowest in five weeks, last at 4.547%.
That boosted megacap growth stocks Tesla, Nvidia and Alphabet, up between 0.4% and 2.6%. The tech-heavy Nasdaq was on track for its sixth straight day in the green.
Apple was an outlier, down 1.3% after its sales forecast for the holiday quarter fell short of Wall Street expectations.
Analysts expect earnings growth of 5.7% for S&P 500 companies in the third quarter, with over 81% of the 403 companies in the benchmark index that have reported profits so far having beaten estimates, per LSEG data.
Most major S&P 500 sectors traded in the green, led by real estate, which jumped 3.3% to an over one-month high.
The small-cap Russell 2000 index advanced 2.8%, touching its highest level in two weeks.
Meanwhile, the CBOE volatility index touched a fresh six-week low, reflecting easing investor anxiety.
At 11:50 a.m. ET, the Dow Jones Industrial Average was up 234.26 points, or 0.69%, at 34,073.34, the S&P 500 was up 42.50 points, or 0.98%, at 4,360.28, and the Nasdaq Composite was up 157.17 points, or 1.18%, at 13,451.36.
Among major movers, Fortinet dropped 16.5% on a downbeat fourth-quarter revenue forecast.
Block jumped 12.3% on raising its annual adjusted profit forecast.
Advancing issues outnumbered decliners by a 6.10-to-1 ratio on the NYSE and by a 4.24-to-1 ratio on the Nasdaq.
The S&P index recorded 17 new 52-week highs and no new low, while the Nasdaq recorded 42 new highs and 51 new lows.
(Reporting by Amruta Khandekar and Shristi Achar A; Editing by Sriraj Kalluvila and Maju Samuel)
