U.S. stocks rose Thursday as investors digested weaker-than-expected labor market data that could help set expectations for both interest rate cut hopes and the health of the U.S. economy.
The S&P 500 (^GSPC) rose 0.4%, while the Dow Jones Industrial Average (^DJI) flatlined. The tech-heavy Nasdaq Composite (^IXIC) rose 1%, amid bumpy trading for all three benchmarks. The gauges ended Wednesday’s volatile session on a mixed note, as their slow start to September continued.
US private employers posted their smallest monthly workforce growth since January 2021, new data from ADP showed on Thursday. Private payrolls grew by about 99,000, well below expectations. Meanwhile, slightly fewer Americans filed new claims for unemployment benefits last week. On Wednesday, government data showed that vacancies fell.
Together, the labor market data serves as a preview for Friday’s August jobs report, crucial for the Fed’s policy decisions and closely watched amid hopes for a “Goldilocks” economy.
Stocks are teetering as the market is torn between conflicting impulses, while data releases paint a bleak picture of the economy. Recent soft figures argue for deeper interest rate cuts. But they could also be a sign that the US is on the brink of a recession and that a “soft landing” is no longer in the offing.
Traders now see a nearly 50-50 chance that the Federal Reserve will cut rates by 0.5% at its September meeting.
On the business front, the earnings of HPE (HPE) and C3.ai (AI) shed some light on the prospects for AI growth. Shares of C3.ai fell 20% after the AI software maker for businesses posted weak subscription revenue. HPE shares fell lower on disappointment with profitability.
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