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Weak U.S. data drives slowdown fears
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U.S. jobs data due Friday, when many markets on holiday
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Gold, crude prices on track for weekly gain
(Updates with late trade)
By Stephen Culp
NEW YORK, April 6 (Reuters) - U.S. stocks reversed an
earlier sell-off and Treasury yields steadied, as investors
digested weak labor market data and awaited Friday's jobs report
for signs the Federal Reserve could pause its interest rate
hikes to try to head off a recession.
All three major U.S. stock indexes bounced back, turning
green by early afternoon, with megacap momentum stocks putting the Nasdaq out front.
Even so, the Nasdaq remains on course to snap three-week
winning streaks at the conclusion of the holiday-shortened week.
Economic data released on Thursday suggested the U.S. labor
market is feeling the effects of the Federal Reserve's hawkish
interest rate hikes in its attempt to cool the economy and, in
so doing, curb inflation.
On Friday, a market holiday, the Labor Department is due to
release its March employment report, and market participants
will have the weekend to digest the data before Monday's opening
bell.
"There’s some level of comfort that investors may be gaining
confidence that the employment report on Friday will show the
slowing in the labor market, which would be a step toward
reducing inflation," Joseph Sroka, chief investment officer at
NovaPoint in Atlanta, said.
At last glance, financial markets have priced in an
approximate 50/50 likelihood that the central bank will either
leave the Fed funds target rate at the 4.75% to 5.00% range at
the conclusion of the next monetary policy meeting in May, or
raise it by 25 basis points, according to CME's FedWatch tool.
"It’s kind of a 50/50 from investors whether there will be a
rate hike at the next Fed meeting," said Tom Hanlin, national
investment strategist at US Bank Wealth Management in
Minneapolis. "Investors are pricing in rate cuts before
year-end, but the Fed has said they will keep rates at a high
level for as long as it takes.
"That gap is what’s causing volatility in the markets," Hanlin added. The Dow Jones Industrial Average rose 20.54 points, or 0.06%, to 33,503.26, the S&P 500 gained 15.89 points, or 0.39%, to 4,106.27 and the Nasdaq Composite added 99.04 points, or 0.83%, to 12,095.90. European stocks moved in the opposite direction as gains in real estate and travel stocks, along with solid industrial production data from Germany helped to offset concerns over a U.S. economic slowdown. The pan-European STOXX 600 index rose 0.51% and MSCI's gauge of stocks across the globe gained 0.19%. Emerging market stocks lost 0.31%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.38% lower, while Japan's Nikkei lost 1.22%. Treasury yields steadied, halting recent sharp declines following the jobless claims report. Benchmark 10-year notes last fell 3/32 in price to yield 3.2976%, down from 3.287% late on Wednesday. The 30-year bond last rose 8/32 in price to yield 3.5447%, down from 3.557% late on Wednesday. The greenback seesawed against a basket of world currencies in advance of Friday's nonfarm payrolls report. The dollar index fell 0.03%, with the euro up 0.26% to $1.0931. The Japanese yen weakened 0.35% versus the dollar at 131.78, while Sterling was last trading at $1.2451, down 0.05% on the day.
Crude prices settled higher, and notched a weekly gain following OPEC+ production cuts and a drop in U.S. oil inventories. U.S. crude edged up 0.11% to settle at $80.70 per barrel, and Brent settled at $85.12 per barrel, up 0.15% on the day. Gold headed lower, extending its loss as the stock market reversed, but the safe-haven metal was on track for a weekly gain as nervousness about recession grows. Spot gold dropped 0.6% to $2,009.09 an ounce. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates YTD Global asset performance Asian stock markets ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Stephen Culp; Additional reporting by Kevin Buckland in Tokyo and Naomi Rovnick in London; editing by Jonathan Oatis and Barbara Lewis)
