Wall St rises as weak economic data fuels rate-pause hopes

Traders work on the floor of the NYSE in New York

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 29, 2023. REUTERS/Brendan McDermid Acquire Licensing Rights

  • Private payrolls growth softer than expected
  • HP falls on trimming FY profit outlook
  • Visa, Mastercard rise on report cos to raise credit card fees
  • Indexes up: Dow 0.18%, S&P 0.42%, Nasdaq 0.59%

Aug 30 (Reuters) – Wall Street’s main indexes rose on Wednesday as fresh economic data indicated a cooling U.S. economy, keeping alive hopes the Federal Reserve could pause rate hikes in September.

The ADP National Employment report showed private payrolls increased by 177,000 jobs in August, compared with estimates of 195,000, signaling a softening labor market.

Fresh gross domestic product (GDP) numbers showed the U.S. economy expanded 2.1% in the second quarter, slower than a preliminary estimate of a 2.4% growth.

“We’re back to a spot now where bad news is something of good news,” said David Russell, global head of market strategy at TradeStation.

“The most recent data really shows that the economy is not overheating and it keeps this sort of Goldilocks hopes alive. It puts us back in the situation where we don’t have as much fear of additional rate hikes at this point in time.”

Gains in Visa (V.N), up 0.9%, kept the cyclicals-heavy Dow Jones (.DJI) afloat, after a report said the company and rival Mastercard (MA.N), up 1.3%, were preparing to raise credit-card fees.

Among other major movers of the day, HP Inc (HPQ.N) slid 7.9% as the personal computer maker trimmed its annual forecast due to slowing demand.

Traders’ bets on the Fed leaving interest rates unchanged in September stood at nearly 91%, up from 88.5% before the private payrolls and GDP data, while bets of a pause in November rose to 55% from about 52% a day earlier, according to the CME Group’s FedWatch tool.

U.S. Treasury yields slipped to a near three-week low, with the 10-year yield last at 4.1%.

Shares of major growth stocks seesawed between gains and losses. Apple (AAPL.O) and Netflix (NFLX.O) added around 1.4% each, while Tesla (TSLA.O) lost 0.3%.

Ten of the 11 major S&P 500 sectors rose, with information technology (.SPLRCT) and energy (.SPNY) leading gains, up 0.8% and 0.7%, respectively.

Investors now await the personal consumption expenditures price index, the Fed’s preferred measure of inflation, and non-farm payroll numbers due on Thursday and Friday, respectively, for more clues on interest rates.

Trading activity has been light heading into the Labor Day holiday, with full-day volumes below the 20-day average for the past eight sessions. Volumes on Wednesday were at about 3.7 billion by midday.

At 11:38 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 62.61 points, or 0.18%, at 34,915.28, the S&P 500 (.SPX) was up 18.63 points, or 0.41%, at 4,516.26, and the Nasdaq Composite (.IXIC) was up 80.95 points, or 0.58%, at 14,024.70.

Vaalco Energy (EGY.N) slumped 17.8%, likely due to a military coup in Gabon, where the oil producer has operations.

Brown-Forman (BFb.N) fell 4.5% after the Jack Daniels whiskey maker missed its first-quarter sales and profit estimates.

Advancing issues outnumbered decliners by a 2.19-to-1 ratio on the NYSE and by a 1.44-to-1 ratio on the Nasdaq.

The S&P index recorded 23 new 52-week highs and one new low, while the Nasdaq recorded 45 new highs and 51 new lows.

Reporting by Shristi Achar A and Amruta Khandekar in Bengaluru; Editing by Savio D’Souza and Vinay Dwivedi

Our Standards: The Thomson Reuters Trust Principles.

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Shristi is a correspondent, part of the markets team reporting on the stock markets across U.S., UK, Canada, Europe and Emerging markets.

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