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US stocks rise solidly, anticipating Fed rate cut

US stocks rise solidly, anticipating Fed rate cut

Traders work on the floor of the New York Stock Exchange (NYSE) at the closing bell, June 7, 2019 in New York City. (Photo: Drew Angerer/Getty Images/AFP)

NEW YORK: Wall Street stocks concluded a strong week with another winning session on Friday (Jun 7) after weak US labour data fuelled expectations for a Federal Reserve interest rate cut.

All three major indices gained at least one percent following the lacklustre May jobs report, which said the US added just 75,000 net new positions in May, less than half the 180,000 economists had been expecting.

Fed chief Jerome Powell earlier this week said the central bank was closely watching ongoing US trade talks with Mexico and China and would take action if the economy falters, comments that were interpreted as opening the door to a rate hike in the coming months.

The Dow Jones Industrial Average gained 263.28 points (1.02 per cent) to 25,983.94, lifting its advance for the week to close to five per cent.

The broad-based S&P 500 advanced 29.85 points (1.05 per cent) to 2,873.34, while the tech-rich Nasdaq Composite Index jumped 126.55 points (1.66 per cent) to 7,742.10.

"Anytime you see the stock market roll higher on an unexpectedly weak economic report, it is because they are expecting a fed rate cut," said Chris Low of FTN Financial.

The Labor Department also trimmed the estimates for April and May. That left the average job gains for the past three months at 151,000, compared to the 12-month average of 196,000, signalling a slowdown in hiring, also attributed to the difficulty finding workers.

"These data make it easier for the Fed to ease either this month or next, if the trade tensions intensify and the stock market drops sharply," economist Ian Shepherdson of Pantheon Macroeconomics said in a research note.

Large technology companies had an especially good day, with Amazon, Facebook, Apple and Google parent Alphabet all winning at least two per cent.

Worries about the sector's prospects have moderated compared with earlier this week, when shares of the companies dove on anxiety about antitrust enforcement.

Source: AFP/ec

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