Wall Street hits records as economic slowdown boosts rate cut hopes

Action was stronger in the bond market, where Treasury yields fell after a series of weaker-than-expected reports on the U.S. jobs market and services companies. The data could keep the Federal Reserve on track to implement Wall Street's desired interest rate cuts by year-end.

Business activity in the U.S. real estate, retail and other service sectors contracted in June for just the third time in 49 months, according to a report. That was below economists' forecasts, which had predicted only slower growth. Perhaps more important for Wall Street, the Institute of Supply Management's report also indicated that prices are rising at a slower pace.

The numbers follow reports earlier in the morning that suggested the labor market is slowing. One said the number of people filing for unemployment benefits in the U.S. last week was slightly higher than economists had expected, though that number is still low by historical standards. Another report from ADP said non-government employers slowed hiring last month, while economists had expected it to pick up.

The hope on Wall Street is that the economy will slow just enough to contain the crisis. upward pressure on inflationbut not enough to cause layoffs and a recession. A much more anticipated report will be released Friday, when the U.S. government presents its full tally of how many workers employers added to their payrolls in June.

The yield on the 10-year Treasury note fell to 4.35% from 4.44% late Tuesday, a notable move for the bond market, and much of the decline came after the release of the U.S. services report. It has been falling since April, on hopes that inflation will slow enough to prompt the Federal Reserve to cut its key interest rate, which is the highest level in more than two decades.

Wednesday’s move erased some of the recent rally in yields. Last week’s debate between President Joe Biden and former President Donald Trump prompted some traders to make decisions in anticipation of a Republican victory. in November, which would increase the possibility of tax cuts and other policies This could lead to an increase in US government debt.

The yield on two-year Treasury notes, which more closely tracks expectations for Fed action, fell to 4.70% from 4.75% late Tuesday. Traders are now betting on a three-in-four chance that the Federal Reserve will cut its key interest rate as early as September, according to data from CME Group.

On Wall Street, Constellation Brands fell 3.3% after fluctuating between gains and losses during the day. The company behind Modelo beer and Robert Mondavi wines reported quarterly profit that beat expectations, but revenue fell slightly short of analysts' forecasts.

Overall, the S&P 500 rose 28.01 points to 5,537.02. The Dow Jones fell 23.85 points to 39,308.00 and the Nasdaq Composite gained 159.54 points to 18,188.30.

It’s a traditionally good time of year for Wall Street, according to Mark Hackett, head of investment research at Nationwide. He said the first half of July was the best two-week stretch for stocks since 1928, and the S&P 500 has advanced in July for nine straight years.

Even if discouraging reports showed Low-income American households struggle to make ends meet In the face of continued high inflation, “investors' glass-half-full mindset continues to drive markets higher,” Hackett said.

In foreign stock markets, indices rose across much of Europe and Asia. France's CAC 40 climbed 1.2 percent to recoup some of its losses caused by fears of a shift away from centrist government policies. This could lead to higher debt for the French government.

The FTSE 100 rose 0.6% in London ahead of a upcoming UK electionswhile Tokyo's Nikkei 225 jumped 1.3%.

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AP Business reporters Yuri Kageyama and Matt Ott contributed to this report.

Credits: AP

Credits: AP

Credits: AP

Credits: AP

Credits: AP

Credits: AP

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