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  • Writer's pictureThe San Juan Daily Star

Wall St climbs on financials boost; investors parse jobs data

Wall Street rose on Thursday, boosted by gains in financial stocks, while strong jobs data prompted investors to tweak their expectations of how early interest-rate cuts could begin.

The recovery in the three main U.S. stock indexes follows a downbeat start to 2024, with the S&P 500 notching its worst two-day performance since late October as investors booked profits after a blistering rally last year.

Bets that the Federal Reserve could start reducing interest rates this year had driven much of the gains towards the end of 2023, though the latest minutes from the central bank’s December policy meeting did not offer many clues on when the easing might commence.

Traders see a 66.4% chance for at least a 25-basis point (bps) rate cut in March and a near 93% probability for May, according to the CME Group’s FedWatch tool.

Financials led gains among the S&P 500 sectors with a 1.1% rise, underpinned by a 3.4% advance in Allstate after Morgan Stanley lifted its rating on the insurer to “overweight”.

An ADP National Employment report showed U.S. private employers hired more workers than expected in December, pointing to persistent strength in the labor market that should continue to sustain the economy.

Private payrolls increased by 164,000 in December, compared with a 101,000 rise the month before. The report comes ahead of the official employment data due on Friday.

“Today’s numbers were a little muted, they weren’t something that says, we need to cut rates tomorrow,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

“So what you’re seeing is people resetting expectations as to when those rate cuts will start.”

Separately, a weekly Labor Department report showed more Americans filed for state unemployment claims than expected.

Yields on longer-dated U.S. Treasury tenors rose after the data, with the yield on the benchmark 10-year note climbing to 3.9761%. [US/]

Investors also assessed the S&P Global’s final reading of composite PMI data for December at 50.9, compared with a preliminary reading of 51.0.

At 11:29 a.m. ET, the Dow Jones Industrial Average was up 274.77 points, or 0.73%, at 37,704.96, the S&P 500 was up 20.24 points, or 0.43%, at 4,725.05, and the Nasdaq Composite was up 31.25 points, or 0.21%, at 14,623.46.

Apple slid 1.1% after brokerage Piper Sandler downgraded the iPhone maker to “neutral”, days after Barclays also cut its rating.

Dow component Merck added 2.4% after TD Cowen upgraded the drugmaker to “outperform” on growth prospects.

Micron Technology gained 1.8% after brokerage Piper Sandler upgraded its recommendation on the chipmaker to “overweight”.

Mobileye Global sank 24.3% after forecasting preliminary fiscal 2024 revenue below estimates, while Walgreens Boots Alliance shed 6.4% after the U.S. pharmacy chain nearly halved its dividend.

Advancing issues outnumbered decliners by a 1.77-to-1 ratio on the NYSE and by a 1.47-to-1 ratio on the Nasdaq.

The S&P index recorded 16 new 52-week highs and no new lows, while the Nasdaq recorded 45 new highs and 50 new lows.

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