Wall Street wavers after October jobs data, hopes for China rebound

NEW YORK (AP) — Stocks fluctuated on Friday as Wall Street weighed how to read the latest data on the U.S. jobs market and hopes that the world’s second-largest economy could pick up steam.

The S&P 500 was 0.1 percent higher in afternoon trade after retreating from a 2.1 percent gain earlier. The wide swing in the index follows a US government report showing that the unemployment rate was higher in October and that employers added fewer jobs than a month earlier. Perhaps more importantly for the market, average employment growth also slowed last month.

The data offer some hope that the Federal Reserve’s deliberate efforts to weaken the labor market may be starting to take hold and could help lower the nation’s high inflation. However, the slowdown was more modest than economists had expected. And it changed very little, if any, thinking on Wall Street about what would happen next: The Fed would continue to raise interest rates to levels rarely seen this millennium, measures that would further slow the economy and push up the prices of stocks and other investments. .

As Wall Street chewed on the jobs report, markets around the world bounced higher on continued speculation that China could relax its zero-covid strategy and stimulate what has long been a key source of global economic growth.

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The Dow Jones Industrial Average was up 31 points, or 0.1 percent, at 32,038 at 12:15 a.m. ET, while the Nasdaq composite was down 0.1 percent. The Russell 2000, which tracks small-cap stocks, fell 0.2 percent.

Fed Chairman Jerome Powell earlier this week pointed to a still-hot labor market as one reason the central bank will eventually need to raise rates higher than previously thought. That boosted expectations for Friday’s jobs report, but the data was mixed enough that Wall Street couldn’t agree on its withdrawal.

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Some analysts pointed to a slight increase in the unemployment rate to 3.7 percent in October. That raised the possibility that September’s 3.5 percent rate could turn out to be the lowest. Big tech companies like Amazon have recently announced layoffs or even layoffs to keep up with the weakening economy. This could keep the economy from the dreaded “wage-price spiral,” where a big jump in wages and a strong labor market creates a vicious cycle that pushes inflation higher.

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Others, however, focused on the still-hot job market, where hiring continues to meet expectations. If anything, Friday’s jobs data likely means that “Fed officials will have to pump the brakes even harder to slow this economy and keep inflation under control,” said Russell Price, chief U.S. economist.

A number of investors and banks raised their expectations on Friday for how high the Fed will ultimately set short-term interest rates next year, with many hoping for something above 5 percent after starting the year at near zero.

Fund behemoth Vanguard’s investment strategy group said the data together “can do nothing to change Vanguard’s Fed expectations” and only increase focus on next week’s update on how bad inflation was across the country in October.

Markets around the world fluctuated within minutes of the release of US jobs data, one of the most anticipated reports on Wall Street each month. The two-year Treasury yield, which tends to track expectations for Fed action, moved up and down a few times before finally settling down.

Markets had been higher earlier in the day, partly on hopes that China could soon ease anti-Covid policies that have sometimes led to entire cities being locked down for weeks.

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The move could provide a big boost to the global economy at a time when aggressive interest rate hikes by central banks from America to New Zealand are raising fears of recession around the world.

Shares in Hong Kong rose 5.4% on Friday, while shares in Shanghai rose 2.4%. Both markets ended the week with strong gains.

The price of copper also increased by 7.2 percent. A stronger Chinese economy will consume more raw materials, and shares of miner Freeport-McMoRan rose 9.5 percent, the biggest gainer in the S&P 500.

Two casino companies that derive much of their revenue from the gambling hub of Macau on China’s southern coast were also among Wall Street’s strongest stocks. Las Vegas Sands rose 4.1% and Wynn Resorts added 4%.

Shares also rose across Europe. France’s CAC 40 rose 2.4 percent, while Germany’s DAX returned 2 percent.

The two-year Treasury yield fell to 4.71% from 4.72% late Thursday. The 10-year yield, which helps dictate rates for mortgages and other loans, rose to 4.16 percent from 4.15 percent.

AP business writers Yuri Kageyama and Matt Ott contributed.

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