Wall St gains as soft US payrolls keep rate cut bets intact

Stocks on Wall Street rose for a second day as a decline in US private payrolls last month kept alive expectations the Federal Reserve will cut its benchmark interest rate next week, and shaking off softness among the Magnificent 7 amid reports Microsoft pared back its expectations for sales of artificial intelligence products.

Among US retailers reporting American Eagle Outfitters jumped after reporting a boost in sales from the Sydney Sweeney and Travis Kelce ad campaigns, while Macy’s and Dollar Tree advanced on their respective earnings.

Across the Atlantic, stock markets were mixed in Europe as the European Central Bank president Christine Lagarde said the continent’s pace of inflation is expected to stay near the monetary authority’s target in the near-term.

And locally, Australian futures are pointing to a positive open when trading on the ASX kicks off across the Tasman, with Statistics New Zealand releasing figures for building work put in place in the September quarter.

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Stocks on Wall Street were broadly stronger as expectations remained intact for the Federal Reserve to cut its key when it reviews monetary policy next week after ADP figures showed the US private sector shed 32,000 jobs in November, a softer turnout than analysts had expected.

The greenback was softer, with the kiwi climbing to 57.72 US cents at 7am in Auckland from 57.49 cents yesterday.

“A soft ADP employment print solidified market expectations for a Fed rate cut next week, but the net move in US Treasuries overnight has been small,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “With many on the FOMC (federal open market committee) focused on the labour market, the data cemented in market expectations that the Fed would cut by 25 basis points next week, which is almost fully priced.”

The S&P 500 was up 0.4% in late trading, while the Nasdaq Composite advanced 0.2%, shaking off declines among the megacap stocks after The Information reported Microsoft pared back its expectations for sales of AI products to business customers. Microsoft declined 1.7% in late trading.

Meanwhile, retailers reporting were broadly stronger with Macy’s and Dollar Tree advancing after posting stronger earnings than expected, while American Eagle jumped 14% as its Sydney Sweeney and Travis Kelce ad campaigns helped drive increased sales in latest quarter.

Inflation in check

Across the Atlantic, stock markets were mixed as European Central Bank president Christine Lagarde said inflation in the euro-zone is expected to stay near the monetary authority’s 2% target in the coming months, with underlying price growth consistent with the bank’s medium-term goal. The kiwi traded at 49.47 euro cents from 49.40 cents yesterday.

The UK’s FTSE 100 and Germany’s DAX 30 were both down 0.1%, while France’s CAC 40 advanced 0.2%, with Airbus clawing back losses from earlier this week over the recall of thousands of A320 jets that needed software upgrades for the cockpit systems.

London-listed advertising firm WPP declined 1% after FTSE Russell said the firm will leave the FTSE 100 later this month. The ad firm’s stock has slumped 65% this year as it sheds clients and faces increased competition from AI.

The antipodes are poised for a positive start to the day, with Australian futures pointing to a 0.1% increase for the S&P/ASX 200 index when trading opens today.

Expectations for the Reserve Bank of Australia to cut its target cash rate had flared up after a softer headline reading September quarter economic growth across the Tasman, although that’s been tempered somewhat as analysts dug into the details.

The New Zealand dollar traded at 87.50 Australian cents from 87.38 cents yesterday.

Locally, Stats NZ will release September quarter value of building work put in place, while winemaker Delegat Group is holding its annual meeting in Auckland.

Reporting by Paul McBeth. Image from Saulo Mohana on Unsplash.