Wall St on the rise, still betting on Fed rate cut; Broadcom earnings loom

Stocks on Wall Street extended their gains as rising US jobless claims kept bets on a Federal Reserve rate cut all but priced in ahead of the monthly non-farm payrolls data on Friday.

Fund manager T Rowe Price led the S&P 500 higher after Goldman Sachs agreed to buy up to a US$1 billion stake in the firm, with the pair eyeing up how they can work together to bring private assets into 401(k) pension funds – akin to New Zealand’s KiwiSaver schemes – after the White House opened to door to more illiquid assets into the schemes.

Semiconductor firm Broadcom – which is sometimes added to the Magnificent 7 to form the BATMMAAN group – is poised to report after trading closes on Wall Street, while Hewlett Packard Enterprise rallied on its increase in quarterly revenue and freshly-listed Figma slumped 19% after falling short in its maiden report.

And the US Department of Justice has launched an investigation into claims of mortgage fraud by Fed governor Lisa Cook, who President Donald Trump is seeking to push out of the central bank’s governing committee as the administration pushes for easier monetary policy.

Easy money

The S&P 500 was up 0.6% in late trading as traders latched on to the latest increase in US unemployment claims as a sign of a jobs market that’s soft enough to warrant rate cuts from the Federal Reserve when it reviews monetary policy later this month.

Non-farm payrolls figures for August are due on Friday in the US, and are expected to show the world’s biggest economy added 75,000 jobs in the month, with the unemployment rate ticking up to 4.3%.

“The nonfarm payrolls print is widely seen as the only real hurdle getting in the way of a September rate cut by the Fed,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “A weak print would lock in a rate cut as a done deal and, if it considerably weaker than expected, then the chance of a 50 basis points cut might well be priced.”

Meanwhile, the US central bank is facing even more external pressure, with the US Department of Justice opening a criminal investigation into claims of mortgage fraud by governor Lisa Cook. President Donald Trump latched on to those allegations in seeking to oust the voting member of the Fed’s governing committee, and has been pushing for the central bank to cut rates more aggressively.

Private pensions

T Rowe Price led the S&P 500 higher, advancing 5.4% in late trading, after Goldman Sachs agreed to buy a 3.5% stake of the fund manager and work with the investment firm on new pension funds that will include private assets after the White House allowed 401(k) to hold the illiquid investments.

New Zealand policymakers are still to decide on whether to loosen liquidity requirements for KiwiSaver funds to make it easier for some managers to increase their allocations to private assets.

Meanwhile, semiconductor firm Broadcom is set to report its quarterly earnings after trading ends. HP Enterprise gained 1.8% in late trading after its latest quarterly revenue was boosted by the acquisition of Juniper Networks.

Software company Salesforce declined after reporting quarterly sales at the bottom end of analysts’ expectations, while design software firm Figma, which soared after its initial public offering earlier this year, sank 19% after missing profit forecasts.

Across the Atlantic, stock markets were broadly stronger with the UK’s FTSE 100 index up 0.4% and Germany’s DAX 30 advancing 0.7%, while France’s CAC 40 declined 0.3%.

British government bond yields eased after 30-year borrowing costs hit their highest level since 1988 earlier this week amid concerns about the government’s ability to keep its finances under control.

Australian futures are pointing to a 0.5% gain for the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar fell to 58.40 US cents at 7am in Auckland from 58.67 cents yesterday.

There’s no major local data scheduled for today, while Stride Property is the only company on the NZX shedding rights to its dividend today.

Reporting by Paul McBeth. Image from Amir Hanna on Unsplash.