The weak jobs report raises hopes of a Fed rate cut

WIRED

Stocks jumped sharply Friday after a softer-than-expected April jobs report boosted hopes that the Federal Reserve could start cutting interest rates soon.
The Dow Jones Industrial Average gained 450 points, or 1.2%.
The S&P 500 surged 1%, while the Nasdaq Composite rallied 1.8%.
Friday’s nonfarm payrolls report showed 175,000 jobs gained in April, below the 240,000 jobs expected by economists surveyed by Dow Jones.
The unemployment rate edged up to 3.9%, versus 3.8% in the prior month, according to the Bureau of Labor Statistics.
“Wage growth being soft is going to help take the concerns about a massive resurgence of inflation off the table.”
Rates dropped following the weak jobs report with the 10-year yield falling below 4.5%.
Following Wednesday’s Federal Reserve’s meeting on Wednesday, Chair Jerome Powell said the central bank was prepared to act if unemployment rate ticked higher.

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Friday saw a sharp increase in stocks as expectations that the Federal Reserve would soon begin reducing interest rates were heightened by a softer-than-expected April jobs report.

A gain of 450 points, or 1.2 percent, was made by the Dow Jones Industrial Average. The Nasdaq Composite rose 1.8%, and the SandP 500 increased by 1%.

The Dow Jones survey of economists predicted 240,000 jobs in April, but the nonfarm payrolls report on Friday revealed only 175,000 new jobs in April. According to data from the Bureau of Labor Statistics, the unemployment rate increased slightly to 3 point 9 percent from 3 point 8 percent the previous month. Another positive indicator for inflation was the wage data, which was lower than predicted.

According to Jamie Cox, managing partner at Harris Financial Group, “it’s soft across the board, which is generally positive for markets.”. It will be easier to dismiss worries about a sharp increase in inflation if wage growth remains moderate. ****.

Following April’s slower-than-anticipated job growth and moderating wage gains, traders are factoring in a second rate cut by year’s end. FedWatch, the CME Group’s tracker of futures market pricing, shows that the probability increased to roughly 72 percent on Friday morning, from less than 50 percent the day before.

The 10-year yield dropped below 4.5 percent as rates declined in response to the disappointing jobs report. Chair Jerome Powell of the Federal Reserve stated that the bank was ready to take action if the unemployment rate increased slightly after the meeting on Wednesday.

“We’re ready to react in case the labor market experiences an unanticipated decline,” Powell added.

By Friday morning, the Nasdaq had dropped almost 0.6 percent and the S&P 500 had lost 0.7 percent of its value so far this week. For the period, the Dow is down 0 points, or 0.4 percent. The major averages could end the week higher thanks to Friday’s gains.

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