After another strong U.S. jobs report suggested the Federal Reserve may defer cutting interest rates until inflation data is available, Wall Street stocks jumped and the currency rose while bond prices dipped on Friday. Gold prices peaked and the Mexican peso, which benefits from U.S.
consumer demand, rose the most since late 2015. The Labor Department said that U.S. firms employed more than expected in March and raised salaries steadily.
According to Troy, Michigan-based Ameriprise Financial senior market strategist Anthony Saglimbene, investors are reconsidering whether the Fed cuts rates three times in 2024.
Data reflecting a softening U.S. services sector and Fed Chair Jerome Powell's statements this week supported 2024 rate reduction. Minneapolis Fed President Neel Kashkari warned Thursday that rate cuts may not be needed this year.
Dec Mullarkey, managing director of investment strategy and asset allocation at SLC Management in Boston, said the year-over-year shift in average hourly wages slowed and will restore confidence that pay gains are moderating.
Fed policy may be influenced by next week's consumer price index (CPI), which is forecast to show core inflation falling to 3.7% from 3.8%. The pan-regional STOXX 600 index (.STOXX), lost 0.84% in Europe, dragging down MSCI's global stock performance index (.MIWD00000PUS).
However, Wall Street rallied, with the Dow Jones Industrial Average (.DJI) up 0.77%, the S&P 500 (.SPX) up 0.96%, and the Nasdaq Composite (.IXIC) up 1.09%. The 10-year Treasury note yield jumped 7.5 basis points to 4.384%. Interest rates are inversely related to bond prices. A measure of the U.S. dollar against six key counterparts, the dollar index rose 0.07%.
Gold reached a record $2,330.06 an ounce, with U.S. gold futures up 1.6% to $2,345.4. Geopolitical tensions in the Middle East, supply fears, and demand growth boosted oil prices for a second week. Crude oil reached October highs. US crude futures increased 32 cents to $86.91 a barrel, while Brent rose 52 cents to $91.17.
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