US stocks rally as market bets on moderating Fed policy
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Traders work on the floor at the New York Stock Exchange.
PHOTO: REUTERS
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NEW YORK - Wall Street stocks engineered their first rally of 2023 on Friday after data suggested a slowing US economy, easing the pressure for more Federal Reserve interest rate hikes.
The Dow Jones Industrial Average finished up 2.1 per cent at 33,630.61, a gain of about 700 points.
The broad-based S&P 500 jumped 2.3 per cent to 3,895.08, while the tech-rich Nasdaq Composite Index surged 2.6 per cent to 10,569.29.
All 11 indices of the S&P 500 finished in positive territory, with markets cheering a drop in the yield on the 10-year US Treasury note, a proxy for US interest rates.
“We’re still in a bad news is good news type of market reaction,” said Mr Nick Reece, a vice-president at Merk Investments.
The much-anticipated monthly government jobs report was solid, with the US economy adding a better-than-expected 223,000 jobs in December and unemployment dipping to 3.5 per cent.
But analysts pointed to a tempering of wage growth, which was up 4.6 per cent on a 12-month basis through December, compared with the 4.8 per cent reading for the prior month.
That was followed by a surprisingly poor services sector report from the Institute for Supply Management.
The report showed the first contraction since spring of 2020, with the gauge of activity hitting 49.6 per cent, and its business activity index and new orders index both plunging.
The ISM report was “very weak and supports the idea that the service part of the economy is finally breaking,” said trading platform Oanda’s Mr Edward Moya.
While stocks were overwhelmingly higher, a standout was Costco Wholesale, which piled on 7.3 per cent after reporting strong December sales.
Major gainers in the Dow included Intel and Walgreens Boots Alliance, both of which won more than 4 per cent. AFP
