US stock futures soared as traders cheered a slowdown in hourly wage growth, which could potentially pave the path for the Federal Reserve to slow its rate hikes.
(Bloomberg) — US stock futures soared as traders cheered a slowdown in hourly wage growth, which could potentially pave the path for the Federal Reserve to slow its rate hikes.
Contracts on the S&P 500 and the Nasdaq 100 rose more than 1% each, as data showing wages cooling outweighed an otherwise robust hiring report. Nonfarm payrolls increased 223,000 last month, surpassing estimates. The unemployment rate came in at 3.5%.
Treasury yields slipped, with the policy-sensitive two-year yield around 4.39%. The dollar dropped.
While softening in the labor market remains a goal for the Federal Reserve, the central bank has been particularly concerned about wage pressures dampening its efforts to get to its inflation goal. The latest report showing wages moderating was celebrated by traders, as it’ll be closely watched by the Fed.
“It has soft landing vibes,” Brent Donnelly, president of Spectra Markets, said of the jobs report. “The economy is strong, but overheating is less of a concern.”
Friday’s report comes after private payrolls figures on Thursday surpassed estimates and a surprise drop in new claims for unemployment benefits also underscored a resilient jobs market.
Market pricing for US interest rates to peak in June rose to above 5% following comments from Atlanta Fed President Raphael Bostic, who said the central bank still has “much work to do” to tame inflation. St. Louis Fed President James Bullard, who is no longer a voting member of the Federal Open Market Committee, said rates were approaching a sufficiently restrictive zone and that inflation expectations had retreated, offering investors some optimism.
Elsewhere, oil headed for a large weekly loss as demand concerns continue to hang over the market. Gold steadied after retreating Thursday from a six-month high reached earlier in the week.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 1% as of 8:56 a.m. New York time
- Nasdaq 100 futures rose 1%
- Futures on the Dow Jones Industrial Average rose 0.9%
- The Stoxx Europe 600 rose 0.4%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.2% to $1.0539
- The British pound rose 0.1% to $1.1920
- The Japanese yen was unchanged at 133.41 per dollar
Cryptocurrencies
- Bitcoin fell 0.5% to $16,760.25
- Ether fell 0.2% to $1,249.4
Bonds
- The yield on 10-year Treasuries declined three basis points to 3.69%
- Germany’s 10-year yield declined six basis points to 2.26%
- Britain’s 10-year yield declined two basis points to 3.53%
Commodities
- West Texas Intermediate crude rose 1.4% to $74.70 a barrel
- Gold futures rose 0.7% to $1,853.30 an ounce
This story was produced with the assistance of Bloomberg Automation.
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