Source : THE AGE NEWS
Stocks rose on Wall Street and Treasury yields fell after the government reported that employers unexpectedly cut 23,000 jobs last month.
Every major index notched a second straight week of gains, which included several fresh records. It marks a strong start to August following several weak months.
The S&P 500 rose 47.68 points, or 0.6 per cent, to 7,757.64. That topped the all-time high it set on Tuesday. The benchmark index has been on a record run throughout the year. The Dow Jones Industrial Average rose 151.83 points, or 0.3 per cent, to 54,036.93. That put it just short of the record it set on Wednesday. The Nasdaq composite rose 342.26 points, or 1.3 per cent, to 26,690.62.
The Australian sharemarket is set to rise, with futures set on Saturday pointing a gain of 33 points, or 0.4 per cent, at the open. The Australian dollar was trading at US70.61¢ at 5.13am AEST. Reporting season heats up this week.
ASX-listed Sunrise Energy Metals will be in focus this morning following the revelation the Pentagon will invest more than half a billion dollars in the company’s “world-first” mining project in central western NSW that produces scandium, a rare critical mineral used in fighter jets, spacecraft and other tools of war.
The $US400 million ($560 million) loan is intended to expand production at the Syerston Scandium Project near Fifield, south-west of Dubbo, as the US seeks to urgently diversify its supply chain for rare earths.
Elsewhere, Iran and Oman remained short of a final deal to reopen the Strait of Hormuz, although President Donald Trump signalled patience, saying the US could wait for Tehran’s economic suffering to soften its stance.
For its part, Iran ruled out direct talks with the US for now, citing what Foreign Minister Abbas Araghchi described as repeated violations of a short-lived interim peace agreement signed in June.
“As long as the American violation of the Memorandum of Understanding continues and the US does not make amends for its violations, there is no possibility of resuming negotiations,” Araghchi was cited as saying by state TV. Araghchi also said a pact with Oman to establish a shipping route through the strait was “very close.”
That didn’t seem to bother Trump, who on Sunday told Axios in a short phone call that the US was now “low-keying it.”
On Wall Street, technology stocks, with their big market values, did much of the heavy lifting for the broader market. Nvidia jumped 2.3 per cent and Broadcom rose 1.7 per cent.
The bond market reacted more strongly to the weaker signal on the jobs market, which can be seen as allowing the Federal Reserve more time before raising interest rates to fight inflation.
The yield on the 10-year Treasury fell to 4.64 per cent from 4.67 per cent just prior to the jobs update. It was as low as 4.60 per cent before recovering a bit.
The yield on the two-year Treasury, which more closely tracks expectations for Fed action on interest rates, fell to 4.20 per cent from 4.22 per cent prior to the report’s release. It was as low as 4.15 per cent before edging back up.
“Although the stock market is likely to welcome the dovish implications of the report, investors should be wary of the future growth potential of an economy where fewer people are working,” said Peter Graf, chief investment officer at Amova Asset Management Americas, in a research note.
Overall, the report paints a dimmer picture of the jobs market, which has been one of the brighter areas of the economy amid rising inflation and worries about household spending. It included a revision to the figures for June and May that involved slashing a combined 103,000 jobs from payrolls for those months.
The Fed has been holding interest rates steady amid worries about hotter inflation, fuelled by a rise in oil prices because of the US war with Iran. Wall Street expects at least one rate increase by the end of the year, with forecasts shifting for the next meeting. Expectations for a rate cut in September are down to 42 per cent, from 55 per cent and from 67 per cent a week ago, according to CME FedWatch.
A weakening jobs market could make matters more complicated for the Fed, which has to balance supporting job growth with fighting inflation. Raising interest rates can help tame inflation by slowing economic growth. A weaker jobs market, though, could become even shakier under higher interest rates as businesses find it more difficult to expand under increased borrowing rates.
Wall Street will get several important inflation updates next week. The most closely watched will be the consumer price index, or CPI, which measures costs for consumers. Wall Street expects it to show that inflation in July rose at a 3.4 per cent rate, which would be a slight easing from the 3.5 per cent rise in June. Inflation has held stubbornly above 3 per cent for most of the year.
“Today’s weak payrolls print may ease the pressure on the Fed to raise rates at its September meeting, but next week’s inflation data will still likely be the deciding factor,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, in a research note.
The jobs report caps a week dominated mostly by corporate earnings and concerns about the ongoing US war with Iran.
Corporate earnings for the second quarter are on track for the strongest growth since 2021. Nearly 90 per cent of companies in the S&P 500 have reported their results and analysts expect profit growth of 50 per cent overall. That has helped allay some concerns on Wall Street about whether big gains for stocks in 2026 are justified. Strong profits help support those gains in stock values.
Airbnb jumped 17.4 per cent following the vacation-rental company’s report that showed stronger profit and revenue for its most recent quarter than analysts expected.
Oil prices gained ground. The price of Brent crude, the international standard, rose 1.3 per cent to $US83.55 a barrel.
With AP, Bloomberg
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