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

Aug 30 – The S&P 500 and Nasdaq closed higher on Wednesday as fresh economic data signaled a cooling US 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 US 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 US Bank Wealth Management.

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

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

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

HP Inc (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 FedWatch tool showed.

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

Volume on US 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 the 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 US Labor Day holiday.

Brown-Forman (BFb) 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.

(Reporting by Shristi Achar A and Amruta Khandekar in Bengaluru and by Noel Randewich in Oakland, Calif; Editing by Savio D’Souza, Vinay Dwivedi, and Richard Chang)