The Federal Open Market Committee is set to meet September 20-21, and in past weeks Fed Chairwoman Janet Yellen and the central bank’s No. 2, Stanley Fischer, have both indicated a rate increase could occur within the next three months in an effort to resume normalization of monetary policy. Energy companies made the biggest gains as the price of oil turned higher for the first time this week.
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The Dow Jones industrial average was up more than 100 points in morning trading as the tempered job gains eased traders’ concerns that the Fed was poised to lift interest rates this month. Average hourly earnings increased three cents or 0.1 percent in August after a solid 0.3 percent rise in July. The Nasdaq composite climbed 29 points, or 0.6 percent, to 5,256.
The Labor Department said the US economy added 151,000 jobs in August, while the unemployment rate remained steady at 4.9%. Economists surveyed by the Journal earlier this year estimated on average the US only needed to add 145,000 jobs each month to keep up with growth in the labor force. Those figures were weaker than economists polled by MarketWatch, who had expected 170,000 jobs to be added to the US economy in August, and a broader market consensus for about 180,000 jobs.
Federal Reserve Chair Janet Yellen and other Fed officials highlighted the economy’s improvement at a conference last month. The weakening jobs figures make it less likely the Federal Reserve will raise rates at its remaining meetings this year, and since investors are uneasy about the state of the economy, that was something of a relief. Lower rates can encourage more borrowing and spending and thereby stimulate the economy. NextEra Energy gained $1.59, or 1.3 percent, to $122.60 and American Electric rose 65 cents, or 1 percent, to $65.06.
ENERGY: U.S. benchmark crude oil futures rose $1.05, or 2.4 percent, to $44.20 a barrel in NY. USA crude had fallen 9 percent over the last four days. Anadarko Petroleum added $2.94, or 5.5 percent, to $56.48 and Halliburton picked up 70 cents, or 1.6 percent, to $43.73.
VERY FAR DOWN: VeriFone Systems, which makes terminals used in electronic payments, slumped after it disclosed disappointing revenue and cut its forecast for the year.
“This is a healthy thing if the gains slow down a little bit, because that reduces the risk that the Fed will quickly raise rates and choke off the expansion”, said Josh Wright, chief economist at iCIMS, a recruitment software company. The stock plunged $3.85, or 19.2 percent, to $16.25.
A REAL LEMON: Sales for athletic apparel maker Lululemon fell short of estimates, and its forecast for the rest of the year was somewhat disappointing. The stock tumbled $7.33, or 9.6 percent, to $69.33. That could help Biogen bring the drug to the market sooner, assuming it meets its goals in clinical studies.
BONDS, CURRENCIES: Bond prices fell.
Bond prices fell. The yield on the 10-year Treasury note rose to 1.61 percent. The dollar rose to 104.17 yen from 103.32 yen and the euro edged down to $1.1162 from $1.1197.
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In the eurozone, Frankfurt’s DAX 30 index firmed 0.8 percent and the Paris CAC 40 was 1.6 percent higher compared with the close on Thursday. The drop was large enough to lead to a decline of 0.2 percent in the index of aggregate weekly hours, in spite of the growth in employment.
