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More reports arrived Wednesday that bolstered those hopes. The Federal Reserve’s next meeting on interest rates is in a week, and the widespread expectation is for it to leave its main interest rate alone at its highest level in more than two decades.
One report said private employers added fewer jobs last month than economists expected. While no one on Wall Street wants to see widespread layoffs, a cooldown in the job market could remove upward pressure on inflation.
A more comprehensive report on the job market from the US government will arrive Friday, one that can cause big swings on Wall Street.
“What we don’t know is how much the markets have already priced in a slowing labor market, or how they will react if Friday’s data comes in stronger than anticipated,” said Chris Larkin, managing director, trading and investing at E-Trade from Morgan Stanley.
A separate report on Wednesday said US businesses were able to increase the amount of stuff they produced in the summer by more than the total number of hours their employees worked. That stronger-than-expected gain in productivity more than offset increases to workers’ wages, and it could also keep a lid on inflationary pressures.
Treasury yields in the bond market were generally lower following the economic reports, and the 10-year yield fell to 4.11 per cent from 4.17 per cent late Tuesday. It was above 5 per cent in October and at its highest level since 2007.
Within the S&P 500, Campbell Soup was the biggest winner and rose 7.1 per cent after reporting stronger profit for the latest quarter than expected.
Travel-related companies were also strong as falling crude prices relieved some pressure on them. Carnival rose 5.9 per cent, and Royal Caribbean Line gained 3.4 per cent.
Airlines also flew higher. Delta Air Lines climbed 3.5 per cent after it told investors it’s sticking to its forecasts for revenue and profit for the end of 2023. United Airlines rose 3.4 per cent, and Southwest Airlines gained 3 per cent.
On the losing end of Wall Street was Brown-Forman, the company whose brands include Jack Daniel’s whiskey. It fell 10.4 per cent after reporting weaker earnings than analysts had forecast. It also cut its forecast for a measure of sales growth for the full year.
Shares of British American Tobacco sank 8.4 per cent in London after the company said it will take a non-cash hit worth roughly £25 billion British pounds ($48 billion) to account for a drop in the value of its “combustible” US cigarette brands. It’s moving toward a “smokeless” world, such as e-cigarettes.
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Shares of Altria Group, which sells Marlboro cigarettes in the United States, fell 2.8 per cent.
Wall Street could be setting itself up for disappointment if cuts to rates do not come as quickly as hoped. While Federal Reserve officials have hinted that their main interest rate may indeed be at a peak, some have said it’s too early to begin considering when cuts could come.
Stock markets abroad were mostly higher. Japan’s Nikkei 225 jumped 2 per cent after a top central bank official reiterated the Bank of Japan’s will keep its monetary policy easy until it achieves a stable level of inflation.
Gains were more modest across the rest of Asia and Europe.
AP
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