Equities in real estate and consumer staples sectors advanced ahead of others, while materials and energy stocks were the biggest losers
U.S. stocks closed higher on Tuesday following softer-than-expected labour market data that reaffirmed expectations of an interest rate reduction by the Fed.
Data on Tuesday showed that U.S. job openings dropped to their lowest level in over three years in April, indicating an easing in labour market tightness that supported a Fed rate cut this year. The U.S. Treasury yields slid after the report.
Wall Street’s main indexes gained after paring earlier loses. Equities in real estate and consumer staples sectors advanced ahead of others, while materials and energy stocks were the biggest losers.
The labour market data was the latest in a series of recent reports that pointed to cooling U.S. economic growth. Data on Monday showed that U.S. manufacturing activity had slowed for the second consecutive month in May.
What we have seen in the data so far this week is that it has been relatively weak, starting with manufacturing PMI and job openings today, said James St. Aubin, CIO at Sierra Mutual Funds.
That has had a total effect of helping the rally in the bond market; but for the stock market, it is a double-edged sword because they’re looking for a rate cut announcement, which has a rising probability with softer data, St. Aubin said.
Market expectations for a September rate cut now sits around 65%, versus below 50% last week, as per the CME’s FedWatch tool. The closely watched non-farm payrolls data for May is due on Friday.
The DJIA added 140.26 points, or 0.36%, to 38,711.29, the S&P 500 advanced 7.94 points, or 0.15%, to 5,291.34 and the Nasdaq Composite rose 28.38 points, or 0.17%, to 16,857.05.
