Wall Street appears poised to add to last week’s rally fueled by U.S. data suggesting a slowdown in U.S. wage growth, one of the Federal Reserve’s targets in its bid to cool decade-high inflation.
Dow Jones industrials futures rose 0.3%, while the S&P 500 rose 0.5%.
On Friday, the four major U.S. indexes rose more than 2% after a government jobs report showed wages nationwide rose 4.6% in December from a year earlier, the smallest increase since two summers ago. Economists had expected wage growth to accelerate. At the same time, the report showed that recruitment across the labor market remains very strong.
Amid the ups and downs, “investors may continue to accept weak data, particularly if signs of subdued wage inflation continue,” SPI Asset Management’s Stephen Innes. “Any signs in the data that the Fed may be putting the brakes on its policy tightening cycle could fuel calls for a softer landing, which could be optimal for stocks.”
The Fed raised its key overnight rate to a range of 4.25% to 4.50% after starting last year virtually at zero. With inflation showing some signs of cooling in recent months, it cut its latest rate hike to 0.50 percentage point after four straight 0.75-point hikes. Markets appear to be counting on a more traditional 0.25 basis point hike from the Fed at its meeting next month.
Past rate hikes have already caused pain in areas of the economy that do best when rates are low, such as housing and high-growth sectors such as technology.
Gains in technology stocks on Monday boosted benchmarks in Asia, where Japanese markets were closed for a holiday.
A Chinese financial news site quoted a top central bank official as saying that China’s more than two-year crackdown on internet companies is almost over.
Caixin quoted Guo Shuqing, Communist Party secretary of the People’s Bank of China, as saying the government would support companies in the sector to create more jobs and compete globally.
Hong Kong-traded shares of e-commerce giant Alibaba jumped 8.7% and technology and entertainment company Tencent’s rose 3.6%.
Alibaba affiliate and leading Chinese financial technology provider Ant Group announced on Friday that its founder, e-commerce billionaire Jack Ma, will relinquish control of the company. The move follows the Chinese government’s efforts to rein in Ma and the country’s technology sector more broadly.
Hong Kong’s Hang Seng added 1.9% to 21,388.34, while the Shanghai Composite added 0.6% to 3,176.08.
In South Korea, the Kospi added 2.6% to 2,350.19. Samsung Electronics, the country’s largest company, gained 2.9%. Taiwan’s benchmark rose 2.6% and Bangkok’s SET index added 1%.
In Australia, the S&P/ASX 200 advanced 0.6% to 7,151.30.
In afternoon European trading, Germany’s DAX gained 0.7% and the CAC 40 in Paris rose 0.4%. Britain’s FTSE 100 was mostly unchanged.
In the coming weeks, companies across industries will show how extensive the damage is when they report how much profit they made during the final three months of 2022.
If companies across the S&P 500 report a decline in overall earnings per share, as some analysts believe, it would be the first decline since the summer of 2020.
In other trade, U.S. benchmark crude added $2.48 to $76.25 a barrel in electronic trading on the New York Mercantile Exchange. It added 10 cents to $73.77 a barrel on Friday. A rise in the price of oil pulled energy stocks higher early on Monday.
Brent crude, the international price standard, rose $2.47 to $81.04 a barrel.
The US dollar rose to 132.17 Japanese yen from 132.05 yen. The euro rose to $1.0692 from $1.0643.
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