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Wall Street quiet ahead of latest US jobs reading

Wall Street
Posted at 8:14 AM, Sep 02, 2022

NEW YORK — Wall Street shifted between small gains and losses Friday ahead of U.S. jobs data that might reinforce U.S. Federal Reserve plans for more interest rate hikes meant to cool inflation.

Futures for the Dow Jones industrials and S&P 500 were each down less than 0.1% before the bell.

Investors awaited figures on August hiring for an update on how the economy is responding to four earlier hikes to cool inflation that is at a four-decade high. A strong reading would give ammunition to Fed officials who say higher interest rates are needed to slow economic activity and reduce upward pressure on consumer prices.

If more than the expected 300,000 jobs were added, it “could likely reinforce further lean towards” a rate hike as big as 0.75 percentage points at this month’s Fed meeting, Yeap Jun Rong of IG said in a report. That would be three times the Fed’s usual margin of change.

In midday trading, the FTSE 100 in London rose 0.6% and the DAX in Frankfurt advanced 1.3%. The CAC 40 in Paris added 0.5%.

On Thursday, the S&P 500 rose 0.3%, rebounding from a four-day string of declines.

The benchmark ended August with a 4.2% loss after surging the previous month on expectations the Fed might ease off rate hikes due to signs U.S. economic activity was cooling and inflation might be leveling off.

Those hopes were dashed last week when Chair Jerome Powell said the Fed needs to keep rates elevated enough “for some time” to slow the economy. The only question for many investors is how much and when the next hike will be.

On Thursday, the Labor Department reported unemployment claims fell last week in another sign of a strong job market. It said earlier this week there were two jobs for every unemployed person in July.

The Dow finished up 0.5% on Thursday, while the Nasdaq slid 0.3%.

In Asia, the Shanghai Composite Index added added less than 0.1% to 3,186.48 while the Nikkei 225 in Tokyo lost less than 0.1% to 27,650.84. The Hang Seng in Hong Kong sank 0.7% to 19,452.09.

China on Thursday ordered most residents of Chengdu, a western city of 21 million people, to stay home following a virus outbreak. The area is recovering from power rationing after a drought depleted reservoirs for hydroelectric dams, but economists said earlier that the national economic impact should be limited because the region's industrial output is a small part of China's total.

The Kospi in Seoul fell 0.3% to 2,409.41 and Sydney's S&P-ASX 200 declined 0.3% to 6,828.70.

India's Sensex declined 0.5% to 59,032.82. New Zealand and Jakarta gained while Singapore and Bangkok declined.

In energy markets, benchmark U.S. crude rose $1.47 to $88.08 per barrel in electronic trading on the New York Mercantile Exchange. The contract tumbled $2.94 to $86.61 on Thursday. Brent crude, the price basis for international oil trading, gained $1.43 to $93.79 per barrel in London. It plunged $3.28 the previous session to $92.36 a barrel.

The dollar rose to 140.44 yen from Thursday's 140.23 yen. The euro gained to $1 from 99.45 cents.