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Wall Street rebounds, bond yields steady ahead of jobs report, holiday weekend


U.S. stocks reversed an earlier sell-off and Treasury yields steadied, as investors digested weak labor market data and awaited Friday’s jobs report for signs the Federal Reserve could pause its interest rate hikes to try to head off a recession.

All three major U.S. stock indexes bounced back, turning green by early afternoon, with megacap momentum stocks (.NYFANG) putting the Nasdaq out front.

Even so, the Nasdaq remains on course to snap three-week winning streaks at the conclusion of the holiday-shortened week.

Economic data released on Thursday suggested the U.S. labor market is feeling the effects of the Federal Reserve’s hawkish interest rate hikes in its attempt to cool the economy and, in so doing, curb inflation.

On Friday, a market holiday, the Labor Department is due to release its March employment report, and market participants will have the weekend to digest the data before Monday’s opening bell.

“There’s some level of comfort that investors may be gaining confidence that the employment report on Friday will show the slowing in the labor market, which would be a step toward reducing inflation,” Joseph Sroka, chief investment officer at NovaPoint in Atlanta, said.

At last glance, financial markets have priced in an approximate 50/50 likelihood that the central bank will either leave the Fed funds target rate at the 4.75% to 5.00% range at the conclusion of the next monetary policy meeting in May, or raise it by 25 basis points, according to CME’s FedWatch tool.

“It’s kind of a 50/50 from investors whether there will be a rate hike at the next Fed meeting,” said Tom Hanlin, national investment strategist at US Bank Wealth Management in Minneapolis. “Investors are pricing in rate cuts before year-end, but the Fed has said they will keep rates at a high level for as long as it takes.

“That gap is what’s causing volatility in the markets,” Hanlin added.

The Dow Jones Industrial Average (.DJI) rose 20.54 points, or 0.06%, to 33,503.26, the S&P 500 (.SPX) gained 15.89 points, or 0.39%, to 4,106.27 and the Nasdaq Composite (.IXIC) added 99.04 points, or 0.83%, to 12,095.90.

European stocks moved in the opposite direction as gains in real estate and travel stocks, along with solid industrial production data from Germany helped to offset concerns over a U.S. economic slowdown.

The pan-European STOXX 600 index (.STOXX) rose 0.51% and MSCI’s gauge of stocks across the globe (.MIWD00000PUS) gained 0.19%.

Emerging market stocks lost 0.31%. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed 0.38% lower, while Japan’s Nikkei (.N225) lost 1.22%.

Treasury yields steadied, halting recent sharp declines following the jobless claims report.

Benchmark 10-year notes last fell 3/32 in price to yield 3.2976%, down from 3.287% late on Wednesday.

The 30-year bond last rose 8/32 in price to yield 3.5447%, down from 3.557% late on Wednesday.

The greenback seesawed against a basket of world currencies in advance of Friday’s nonfarm payrolls report.

The dollar index fell 0.03%, with the euro up 0.26% to $1.0931.

The Japanese yen weakened 0.35% versus the dollar at 131.78, while Sterling was last trading at $1.2451, down 0.05% on the day.

Crude prices settled higher, and notched a weekly gain following OPEC+ production cuts and a drop in U.S. oil inventories.

U.S. crude edged up 0.11% to settle at $80.70 per barrel, and Brent settled at $85.12 per barrel, up 0.15% on the day.

Gold headed lower, extending its loss as the stock market reversed, but the safe-haven metal was on track for a weekly gain as nervousness about recession grows.

Spot gold dropped 0.6% to $2,009.09 an ounce.

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