After some back and forth, the general expectation on Wall Street is now that the Fed will indeed cut its main interest rate next week in hopes of shoring up the slowing job market. If it does, that would be the third such cut this year.
Investors love lower interest rates because they boost prices for investments and can juice the economy. The downside is that they can worsen inflation, which remains above the Fed’s 2 per cent target.
But Treasury yields ticked higher on Thursday following another rise for Japanese government bonds. Expectations for a coming Fed cut to rates also took a very slight hit after reports suggested the US job market may be a bit better than expected.
One report said fewer US workers filed for unemployment last week. The number was the lowest in more than three years.
A separate report said that the number of layoffs announced last month fell by more than half from October’s surge. It still was above year-ago levels, though, according to outplacement and executive coaching firm Challenger, Gray & Christmas.
While stronger-than-expected data is of course good news for US workers, it could also indicate the job market doesn’t need as much help from lower interest rates.
The yield on the 10-year Treasury rose to 4.10 per cent from 4.06 per cent late Wednesday. While the move was relatively modest, increases in yields can discourage some buyers from buying stocks and other investments instead of bonds.
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Among the stocks falling on Wall Street was Kroger, which dropped 5.7 per cent. The grocer reported weaker revenue for the latest quarter than analysts expected, though its profit beat forecasts. It also lowered the top end of its forecasted range for an important measure of revenue this year, while raising the bottom end by less.
Snowflake sank 11.1 per cent despite topping analysts’ expectations for profit and revenue in the latest quarter. Analysts at UBS said the company’s stock may be feeling a letdown after excitement had grown so much after it blew past expectations in the quarter just before. Growth in product revenue also decelerated a bit in the latest quarter.
In stock markets abroad, indexes rose modestly in Europe following a mixed finish in Asia.
Japan’s Nikkei 225 index jumped 2.3 per cent, while South Korea’s Kospi slipped 0.2 per cent.
AP
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