US Stocks Fluctuate as Traders Parse Jobs Data: Markets Wrap

(Bloomberg) — US stocks climbed as investors grappled with disparate economic data. While latest jobs data pointed to a robust labor market, keeping pressure on the Federal Reserve to stay aggressive, a separate set of numbers showed a contraction in US manufacturing activity, which could assuage some of the central bank’s concerns.

The S&P 500 and the Nasdaq 100 rose after fluctuating earlier when the number of available job positions came in above the median estimate. Sentiment improved as traders digested data from the Institute for Supply Management showing improving supply chain conditions, declining input prices and slower demand — all developments that the Fed would welcome.

Treasuries pared earlier gains, with the 10-year yield around 3.70%. The dollar trimmed earlier declines.

Investors in the US are now awaiting the Fed’s meeting minutes for clues about why the central bank raised its 2023 inflation forecast. The minutes are also likely to show that concerns about a still-tight jobs market pushed officials to project a terminal rate above 5%, according to Bloomberg Economics.

After Wednesday’s job openings data, investors will also be watching the nonfarm payrolls report on Friday, for any signs of possible softening in the labor market. The onslaught of economic data that is releasing this week could stoke day-to-day volatility.

“The tone of the minutes will be sufficiently hawkish as to serve as a reminder that the Fed still has work to do before arriving at terminal,” wrote Ben Jeffery and Ian Lyngen of BMO Capital Markets. “Assuming the Fed’s higher-for-longer commitment has enough backing to leave a rate cut in 2023 as the great unknown, there is little on the immediate horizon that would justify a bull steepener of any significance.”

Minneapolis Fed President Neel Kashkari, who holds a vote on FOMC decisions this year, said the central bank has at least another percentage point of hikes to do this year, even as inflation shows signs of easing. He said this in an essay published Wednesday on Medium.

Meanwhile, news of China considering further support for property developers boosted shares in Hong Kong. While China’s about-turn from its Covid Zero policies has been widely cheered by investors, it still raises complicated questions about what it means for monetary policy, global inflation and demand for goods and services.

A report showing French inflation unexpectedly slowed added to signs of easing price pressure in the euro area. The Stoxx Europe 600 Index saw broad gains.

Key events this week:

FOMC meeting minutes, Wednesday
Eurozone PPI, Thursday
US ADP employment change, initial jobless claims, Thursday
China trade, Caixin PMI, Thursday
Eurozone retail sales, CPI, consumer confidence, Friday
Germany factory orders, Friday
US nonfarm payrolls, factory orders, durable goods, Friday

The main markets moves are:

Stocks

The S&P 500 rose 0.4% as of 10:55 a.m. New York time
The Nasdaq 100 was little changed
The Dow Jones Industrial Average rose 0.2%
The Stoxx Europe 600 rose 1.1%

Currencies

The Bloomberg Dollar Spot Index fell 0.4%
The euro rose 0.5% to $1.0604
The British pound rose 0.7% to $1.2049
The Japanese yen fell 0.7% to 131.94 per dollar

Cryptocurrencies

Bitcoin rose 1.1% to $16,839.23
Ether rose 3.6% to $1,255.1

Bonds

The yield on 10-year Treasuries declined four basis points to 3.70%
Germany’s 10-year yield declined 10 basis points to 2.29%
Britain’s 10-year yield declined 14 basis points to 3.51%

Commodities

West Texas Intermediate crude fell 4.4% to $73.55 a barrel
Gold futures rose 0.9% to $1,863.10 an ounce

This story was produced with the assistance of Bloomberg Automation.

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