US Stocks Rise Thursday 06/01 15:48
Wall Street rose Thursday with hopes that the Federal Reserve may soon take
it easier on its hikes to interest rates.
NEW YORK (AP) -- Wall Street rose Thursday with hopes that the Federal
Reserve may soon take it easier on its hikes to interest rates.
The S&P 500 rallied 1% after a suite of reports painted a picture of a split
U.S. economy. The job market remains solid, but manufacturing is weakening and
retailers are seeing shoppers under pressure. Altogether, investors saw the
data pushing the Fed toward not hiking rates at its meeting in two weeks, which
would be the first time that's happened in more than a year.
The Dow Jones Industrial Average gained 153 points, or 0.5%, while the
Nasdaq composite led the market with a 1.3% jump. It's full of technology
companies and other high-growth stocks that tend to benefit most from lower
One positive for the market came late Wednesday when the House of
Representatives approved a deal to prevent a possibly catastrophic default on
the U.S. government's debt. But that was what Wall Street expected, and only a
trip-up for the deal before it gets signed by President Joe Biden would likely
cause big waves for stocks.
Investors are more concerned about whether the economy will fall into a
recession before inflation recedes enough to convince the Federal Reserve to
take it easier on interest rates.
Reports on Thursday gave a clouded view. One said that fewer workers applied
for unemployment benefits last week than expected, while another suggested
employers increased their payrolls last month by more than forecast.
That's good news for workers and the overall economy, which has been slowing
under the weight of much higher interest rates. But a strong job market could
also keep pressure up on inflation, pushing the Fed to keep rates high.
On the flip side, manufacturing is continuing to get hit hard, in part by
higher interest rates. A report from the Institute for Supply Management said
manufacturing shrank for a seventh straight month in May. The contraction was
worse than both the prior month and what economists expected.
Following the reports, traders were largely betting on the Fed to hold rates
steady at its next meeting in two weeks. That's something a Fed official a day
earlier hinted may happen, though Fed Gov. Philip Jefferson also said that
wouldn't necessarily mean the end to hikes.
After that, traders are split on whether the Fed will follow up with another
hike to rates at its next meeting in July. That's key because high rates work
to lower inflation by slowing the economy and hurting prices for stocks and
Tech and other high-growth stocks tend to get hit hardest by higher rates,
and hopes for a pause to hikes had several Big Tech companies leading the way
on Wall Street.
Apple, Microsoft and Amazon all rose at least 1.3%. Their movements carry
extra weight on the S&P 500 because they're some of the most valuable on Wall
A report on Friday could further sway the Fed and its chair, Jerome Powell.
It's the U.S. government's comprehensive report on the job market.
For as much as Wall Street hopes the end to rate hikes is near, it may be
getting ahead of itself, said JJ Kinahan, CEO of IG North America.
"The market's been like a spoiled child," he said. "Every six weeks, it
stamps its feet and says, ?Not this time!' And every time, Powell says, ?We're
going to continue to do this,' and the market says, ?I can't believe they did
So far, the economy has held up despite a long list of worries because of a
still-strong job market and resilient spending by consumers. But reports from
several retailers suggested shoppers are feeling more pressure.
Dollar General dropped 19.5% after it reported weaker profit and revenue for
the latest quarter than analysts expected. It said the economic environment has
been more challenging than it expected, and it cut its financial forecasts for
the full year. It tends to cater to lower income households.
Macy's, which also owns Bloomingdale's stores, rose 1.2% after reporting
better-than-expected profit but weaker revenue than forecast. It also slashed
expectations for the year and said shoppers began to pull back starting in
Some of the enthusiasm surrounding Wall Street's recent frenzy around
artificial intelligence also cooled.
C3.ai gave a forecast for revenue this upcoming fiscal year that failed to
wow Wall Street like Nvidia's did last week. C3.ai tumbled 13.2%, though it's
still up 210% so far this year. Nvidia rose 5.1%.
Also on the winning end was Hormel Foods, which rose 5.1% after reporting
stronger profit for the latest quarter than expected. Its brands include
Skippy, Spam and Applegate meats.
All told, the S&P 500 rose 41.19 points to 4,221.02. The Dow gained 153.30
to 33,061.57, and the Nasdaq jumped 165.70 to 13,100.98
In the bond market, the yield on the 10-year Treasury fell to 3.59% from
3.65% late Wednesday. It helps set rates for mortgages and other loans that
influence the economy's strength.
The two-year Treasury yield, which moves more on expectations for the Fed,
fell to 4.32% from 4.40%.