On Wednesday, the Dow ended a three-day losing run by closing higher as data showing that private job growth slowed to a 32-month low helped allay concerns that the Federal Reserve might not need to raise interest rates again before year’s end, which would have stopped the current increase in Treasury yields. The Nasdaq climbed 1.4%, the S&P 500 increased 0.8%, and the Dow Jones Industrial Average gained 0.4%, or 127 points. weakening services data and slowing private employment growth keep the pressure on yields on treasuries. According to a study released on Wednesday by ADP and Moody’s (NYSE:MCO) Analytics, private payroll growth slowed to 89,000 in September from 180,000 in August. That represented the slowest rate of increase since January 2021 and fell far short of the 153,000 experts had predicted. In contrast to the decreasing job growth recorded last month, which indicated that the labor market was becoming less tight, data released on Tuesday showed an unexpected increase in labor demand. In addition, fewer private job increases this month coincided with a “steady decline in wages in the past 12 months,” according to Nela Richardson, chief economist at ADP.
The U.S. services sector, which continues to be a major contributor to inflation, had a minor slowdown in activity in September, adding to optimism that the Fed’s higher rates for a longer period of time are beginning to have an impact. Following the release of the data, Treasury yields paused from their recent surge as expectations that the Fed will have to raise rates in November decreased. According to the Fed Rate Monitor Tool on Investing.com, just about 22% of traders anticipate the Fed raising rates in November, down from about 30% a day earlier. With falling Treasury yields supporting the growth sectors of the market, especially technology, Alphabet Inc. Class A (NASDAQ:GOOGL) and Microsoft Corporation (NASDAQ:MSFT) led the way higher. Despite KeyBanc downgrading Apple Inc. (NASDAQ:AAPL) from overweight to sector weight, citing valuation concerns, the iPhone manufacturer ended the day nearly 1% higher. After revealing late Tuesday plans to divide its programmable chip division into a standalone corporation starting Jan. 1, Intel (NASDAQ:INTC) increased, setting up an IPO in two to three years. The action indicates that Intel “isn’t done restructuring its assets through shareholder friendly strategies, creating room for more potential value creation moving forward,” according to Wedbush.
Oil prices fell more than 5% as gasoline inventories rose and ministers from OPEC and allies led by Russia, or OPEC+, chose to maintain output levels. As a result, energy equities were unable to participate in the broader market gain. The largest decliners on the day included Marathon Oil (NYSE:MRO), Devon Energy Corporation (NYSE:DVN), and Schlumberger NV (NYSE:SLB). The decision to maintain current production levels was widely anticipated, and Saudi Arabia and Russia restated their commitment to continuing their supply curbs through the end of the year. Reduced supply is required to support pricing and counteract sluggish demand growth. “OPEC+ leaders need to remain committed to supply restraint—and keep output near current levels over the next year—to keep oil inventories generally low and prices high,” S&P Global stated in a study earlier this week.
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