Wall Street stocks made cautious gains at the open on Thursday following data that pointed to resilience in the US labour market and weak results from software group Salesforce.
Wall Street’s benchmark S&P 500 was up 0.1 per cent. The tech-heavy Nasdaq Composite was flat, weighed down by a 4.3 per cent fall for Salesforce after quarterly earnings overnight disappointed investors.
The moves came as data from the US labour department showed that the number of new applications for unemployment aid edged up to 232,000, but remained at historically low levels despite the cooling economy.
The figure was shy of analysts’ expectations for 235,000 claims, raising hopes that the Federal Reserve’s tightening campaign will culminate in a “soft landing”, as inflation goes down without a severe recession.
Two top Fed officials signalled on Wednesday their support for the central bank to abstain from raising its benchmark policy rate at its policy meeting in June.
Following dovish comments from Fed governor Philip Jefferson and Philadelphia Fed president Patrick Harker, the implied likelihood of a rate rise at the next meeting fell back to about 37 per cent, but investors were still pricing in some chance of an increase at the July meeting.
Meanwhile, investors awaited for the Senate to vote on the bill to raise the $31.4tn US debt ceiling — the final stage before it can be signed into law, averting a historic government default.
“We still have to get through the Senate, but I’m more inclined to think that’s a rubber stamp at this point,” said Stephen Innes, managing partner at SPI Asset Management.
“The market here is positioned very much in favour of this going through. Stocks would be percentage points lower if investors suspected there was any hint that this wouldn’t happen,” Innes added.
At the same time, the shares of software company C3.ai slid by a fifth after its quarterly revenue forecast missed estimates, undermining Wall Street’s recent rally around artificial intelligence-related stocks.
Europe’s region-wide Stoxx 600 added 0.4 per cent, Germany’s Dax gained 0.7 per cent and France’s Cac 40 was up 0.1 per cent, backtracking on its gains earlier in the day.
Traders grew more confident after official data showed that eurozone-wide inflation decelerated more than expected, falling to 6.1 per cent in May, its lowest level since Russia’s full-scale invasion of Ukraine more than a year ago. A consensus of economists’ forecasts gathered by Reuters expected inflation to fall to 6.3 per cent.
Core inflation, which strips out energy and food prices, fell from 5.6 per cent in April to 5.3 per cent in May.
The numbers gave traders more confidence that the European Central Bank would agree only a quarter-point rise when it meets on June 15, and could represent the peak of interest rates in the eurozone.
“A September rate hike has become more and more unlikely, and even a July hike is starting to be put into question,” said Kamil Kovar, senior economist at Moody’s Analytics.
In Asia, China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks advanced 0.2 per cent on the back of an unexpected rebound in a key gauge of Chinese factory activity.
The Caixin/S&P Global manufacturing purchasing managers’ index rose to 50.9 in May, in contrast to the official manufacturing PMI released earlier this week, which declined to 48.8. A reading above 50 indicates expansion compared with the previous month.
However gains evaporated in Hong Kong and the benchmark Hang Seng stock index finished 0.1 per cent lower.
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