© Reuters. FILE PHOTO: People walk past a screen displaying the Hang Seng stock index at Central district, in Hong Kong, China October 25, 2022. REUTERS/Lam Yik/File Photo
By Stephen Culp
NEW YORK (Reuters) – U.S. stock indexes were mixed and benchmark Treasury yields rebounded after the much-anticipated U.S. August employment report showed an uptick in unemployment and cooler-than-expected wage growth, cementing expectations that the Federal Reserve will let key interest rates stand at its September policy meeting.
The three major indexes gave up earlier gains as the session progressed and investors digested the data ahead of the long U.S. holiday weekend. The Nasdaq was last modestly lower, the just below the flatline and the Dow was modestly green.
All three indexes were on course to notch gains on the week.
“Today, people are coasting into the holiday weekend with relief that the job numbers were solid,” said Ryan Detrick, chief market strategist at Carson Group in Omaha.
“There are signs of the economy slowing, which is what the Fed wants to see,” Detrick added. “It likely opens the door for no rate hike at the next Fed meeting in three weeks.”
The Labor Department’s payrolls report showed the U.S. economy added more jobs than expected last month, but the rising unemployment and participation rates, along with a welcome cool-down in average hourly wage growth, solidified expectations that the Fed will let key interest rates stand this month.
Financial markets are pricing in a 93% likelihood of such a pause this month, according to CME’s FedWatch tool.
But what the Fed will do beyond September remains an open question.
The rose 67.82 points, or 0.2%, to 34,789.73, the S&P 500 lost 1.15 points, or 0.03%, to 4,506.51 and the dropped 42.86 points, or 0.31%, to 13,992.11.
European stocks steadied, ending the session unchanged as a decline in luxury and auto shares was offset by gains in mining and healthcare. The posted its biggest weekly gain since mid-July.
The pan-European STOXX 600 index lost 0.01% and MSCI’s gauge of stocks across the globe shed 0.03%.
Emerging market stocks rose 0.48%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.23% higher, while rose 0.28%.
rose but were last holding steady at the shorter end of the curve after the August employment report.
“(The economy) might be slowing but we still have an economy led by a very strong consumer,” Detrick said. “Higher yields may be the anticipation of a better economy down the road.”
Benchmark 10-year notes last fell 21/32 in price to yield 4.1729%, from 4.091% late on Thursday.
The 30-year bond last fell 44/32 in price to yield 4.2869%, from 4.204% late on Thursday.
The greenback gained ground against a basket of world currencies in the wake of the payrolls data, but was on track to be essentially flat for the week.
The rose 0.61%, with the euro down 0.61% to $1.0775.
The Japanese yen weakened 0.41% versus the greenback at 146.16 per dollar, while Sterling was last trading at $1.2585, down 0.69% on the day.
Oil prices jumped, touching their highest level in over seven months, driven by expectations of tightening supply.
surged 2.3% to settle at $85.55 per barrel, while settled at $88.55 per barrel, up 1.98% on the day.
Gold prices wavered but was last nominally higher.
added 0.1% to $1,940.89 an ounce.
