Wall Street stocks rose and Treasuries rallied on Monday after reports showed the US economy added fewer jobs in December than in the previous month.
The US blue-chip S&P 500 index rose 1.6 percent in choppy trade, while the technology-focused Nasdaq Composite gained 1.5 percent, erasing earlier losses.
The gains came after data showed that US employment growth slowed last month in a sign that the Federal Reserve’s rate hike program, which begins in early 2022, is tightening the economy.
The U.S. added 223,000 jobs in December compared with 256,000 in the previous month, according to the labor department. The unemployment rate fell to 3.5 percent from a downwardly revised 3.6 percent. Wall Street economists expect the world’s largest economy to add 200,000 new jobs last month and the unemployment rate to hold steady at a reported 3.7 percent.
Average hourly earnings rose 4.6 percent annually on a seasonally adjusted basis compared with 4.8 percent in the previous month.
“A solid 223,000 gain in non-farm payrolls and a drop in unemployment to a 50-year low in December will, at face value, do little to ease the Fed’s concerns about persistent core services inflation,” said Andrew Hunter, senior US economist at Capital Economics.
“That said, the softer gains in average hourly earnings suggest wage growth remains slow and we still think the labor market will strengthen further this year.”
The two-year Treasury yield, which is sensitive to changes in interest rate expectations, fell 0.16 percentage points to 4.29 percent, while the benchmark 10-year yield fell 0.13 percentage points to 3.59 percent. Bond yields move inversely to their prices.
The market now expects US interest rates to be just over 4.9 percent in June, down from 5.1 percent before the release of December jobs figures, with rates expected to fall below 4.5 percent by the end of the year from 4.7 percent before the job. report.
Still, Friday’s gains on Wall Street were held back by a drop in Tesla shares. The electric car maker, which suffered a severe selloff in 2022 that bleeds into 2023, fell 0.8 percent on Friday in New York.
Elsewhere, the regional Stoxx Europe 600 added 1 percent, taking gains for the week to 4.2 percent and leaving the index on track to register the best start to the year in more than a decade. London’s FTSE 100 gained 0.8 percent, France’s Cac 40 rose 1.4 percent and Germany’s Dax added 1.1 percent.
The move in European equity markets came after the flash index of consumer prices in the euro zone fell to 9.2 percent in December from 10.1 percent in November. Economists polled by Bloomberg expect a 9.5 percent annual increase. Core inflation, which strips out volatile food and energy prices, rose to 5.2 percent from 5 percent in November.
Data published earlier this week showed lower-than-expected price pressures in Germany, France and Spain by the end of 2022, easing pressure on the European Central Bank to maintain an aggressive stance on inflation.