Wall Street capped a choppy week of trading Friday with the best day for the stock market in over two months, as traders welcomed cooler-than-expected US employment data as a sign that inflationary pressures on the economy are easing.
The modest increase in hiring last month suggests the Federal Reserve’s aggressive streak of rate hikes may be finally starting to take a bigger toll on the world’s largest economy. That may help reassure the Fed that inflation will ease further, which could move the central bank closer to lowering interest rates.
“Some of this data coming out of the employment report dampens that narrative a little bit,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “They want to cut interest rates, but they need more confidence in the inflation data and today’s wage data is a little bit more confidence for them.”
After coming into the year forecasting six or more cuts to rates in 2024, traders are now largely betting on just one or two, if any, according to data from CME Group. Motorola Solutions closed 5.2 per cent higher after the communications equipment maker raised its profit forecast for the year.