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Wall Street ends higher as economic data fuels rate-pause bets

Published Aug 30, 2023 05:55AM ET Updated Aug 30, 2023 06:55PM ET
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© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 29, 2023. REUTERS/Brendan McDermid
 
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By Shristi Achar A and Noel Randewich

(Reuters) - The S&P 500 and Nasdaq closed higher on Wednesday as fresh economic data signaled a cooling U.S. economy, reinforcing expectations the Federal Reserve will pause rate hikes in September.

The S&P 500 index reached its highest in nearly three weeks after an ADP National Employment report showed private payrolls increased by 177,000 jobs in August, compared with estimates of 195,000, suggesting a softening labor market.

The Nasdaq logged its highest close since Aug. 1.

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

"Somewhat softer employment data is easing investor concerns for future Federal Reserve interest rate hikes," said Rob Haworth, a senior investment strategist at U.S. Bank Wealth Management.

The prospect of a "softer landing" for the U.S. economy also supported demand for growth stocks and other riskier assets at the expense of defensive stocks, Haworth added.

Nvidia (NASDAQ:NVDA) rose 1% to close at its highest ever. It was Wall Street's most traded company, with $35.5 billion worth of shares exchanged during the session.

Mastercard (NYSE:MA) and Visa (NYSE:V) gained around 0.5% each after a report said the companies were preparing to raise credit card fees.

HP Inc (NYSE:HPQ) tumbled 6.6% after 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 89%, up from 86% the day before, while bets of a pause in November rose to 54% from about 52%, the CME Group's (NASDAQ:CME) FedWatch tool showed.

U.S. Treasury yields slipped to a near three-week low, with the 10-year yield last at 4.12%.

Volume on U.S. exchanges was light, with 9.0 billion shares traded, compared to an average of 10.6 billion shares over the previous 20 sessions.

The S&P 500 climbed 0.38% to end at 4,514.87 points.

The Nasdaq gained 0.54% at 14,019.31 points, while Dow Jones Industrial Average rose 0.11% to 34,890.24 points.

Of the 11 S&P 500 sector indexes, nine rose, led by information technology, up 0.83%, followed by a 0.51% gain in energy.

Investors are now looking to 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 this week ahead of Monday's U.S. Labor Day holiday.

Brown-Forman fell 4% after the Jack Daniels whiskey maker missed its first-quarter sales and profit estimates.

Advancing issues outnumbered falling ones within the S&P 500 by a 1.9-to-one ratio.

The S&P 500 posted 24 new highs and one new low; the Nasdaq recorded 70 new highs and 76 new lows.

Wall Street ends higher as economic data fuels rate-pause bets
 

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Comments (8)
Rajesh Kumar
Rajesh Kumar Aug 30, 2023 9:19PM ET
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Inflation is preventing the government from increasing the fiscal spending on social programs such as Medicare, etc and the Democrats are fearing that lack of spending will bring back Republicans and Trump. So, every now and then Feds keep shouting Inflation, inflation .... In the next 12 months, inflation and interest rates will be very high which will bring back the Republicans in next year election.
Michael Byrne
Michael Byrne Aug 30, 2023 6:38PM ET
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Any news is good news, what's wrong with this picture?
Michael Byrne
Michael Byrne Aug 30, 2023 6:37PM ET
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There is only one thing, without a recession, inflation will not hit 2%.
Casador Del Oso
Casador Del Oso Aug 30, 2023 9:40AM ET
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Great wordsmithing again. A slight decrease is now known as cooling.
Casador Del Oso
Casador Del Oso Aug 30, 2023 9:40AM ET
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The only thing that will stop inflation is to drastically cut fiscal spending. The only thing postponing a recession is excessive fiscal spending.
First Last
First Last Aug 30, 2023 9:40AM ET
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Cooling is the proper word to use.  It's certainly not heating up.
First Last
First Last Aug 30, 2023 9:40AM ET
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Tax increase on the rich would lower inflation and the Federal deficit.  Less production of luxury goods/services would free up the economy to produce more everyday goods/services.
Casador Del Oso
Casador Del Oso Aug 30, 2023 9:40AM ET
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When a thermometer moves to 99 from 100 it's cooling, but definitely not cool.
First Last
First Last Aug 30, 2023 9:40AM ET
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This article, you & me all used the word "cooling", not "cool".
Tom Scheuermann
Tom Scheuermann Aug 30, 2023 9:34AM ET
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market all excited about the Fed stopping at over 5%? ok....and what if rates are here for years. everytime when someone renews a mortgage they are losing 1000s per month of disposable income. when does that tip the economy? idk but it has to eventually.
Thor Gao
Thor Gao Aug 30, 2023 9:34AM ET
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We all know it’s manipulated, fraudulent market. Don’t try to explain it. Just standby and watch what would happen
Brad Albright
Brad Albright Aug 30, 2023 9:34AM ET
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Who renews a mortgage when interest rates are higher. Is this a thing?
Matt Kay
Matt Kay Aug 30, 2023 9:34AM ET
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do you want prices to go up exponentially?
Jimmy Tsang
Jimmy Tsang Aug 30, 2023 9:21AM ET
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Reuters, Bloomberg, and all these 💩media, where is the signal of raising the rate now??
Aug 30, 2023 8:00AM ET
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Ready for low of the year
First Last
First Last Aug 30, 2023 8:00AM ET
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You're all in on shorts or Dec 2023 puts?
Derick Lim
Derick Lim Aug 30, 2023 6:08AM ET
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Analysts will spew out optimism news once the datas are out regardless positive or negative as Messiah AI of Nvidia went missing
Trumpster Rocks
Trumpster Rocks Aug 30, 2023 6:08AM ET
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Analyst are as Big a Joke as Joe and Kamala  and Hunter I rest my case.... Billions later hint hint and sniff and snort
Tom Scheuermann
Tom Scheuermann Aug 30, 2023 6:08AM ET
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you are not bright. Trump will get destroyed in a general election, might as well get used to that idea
First Last
First Last Aug 30, 2023 6:08AM ET
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Trumpster Rocks   The cases you make are as bad as the cases Trump makes in court.  I guess that's why you share his name.
Aug 30, 2023 6:08AM ET
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Economy does not support this rally. What a rigged market
 
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