Wall St rises as weak economic data fuels rate-pause hopes

By Shristi Achar A and Amruta Khandekar

(Reuters) – Wall Street’s main indexes rose on Wednesday as fresh economic data indicated a cooling U.S. economy, keeping alive hopes the Federal Reserve could pause rate hikes in September.

The ADP National Employment report showed private payrolls increased by 177,000 jobs in August, compared with estimates of 195,000, signaling an easing labor market.

Fresh gross domestic product (GDP) numbers showed the U.S. economy expanded 2.1% in the second quarter, slower than a preliminary estimate of a 2.4% growth.

“Those reports (private payrolls and GDP) were really actually positive for the market, even though they were a little soft,” said Thomas Martin, senior portfolio manager at Globalt Investments.

“The market thinks the Fed almost certainly won’t raise (rate) in September and they have a couple of options left on the table for the end of the year.”

Traders’ bets on the Fed leaving interest rates unchanged in September stood at nearly 91%, up from 88.5% before the data, while bets of a pause in November rose to nearly 59% from about 52% a day earlier, according to the CME Group’s FedWatch tool.

Investors now await the personal consumption expenditures price index, the Fed’s preferred measure of inflation, and non-farm payroll numbers due on Thursday and Friday, respectively, for more clues on interest rates.

U.S. Treasury yields eased after the payroll and GDP data, with the 10-year yield last at 4.09%.

Shares of major growth stocks seesawed between gains and losses, with some analysts attributing the volatility to thin trading volumes. Apple gained 1%, while Tesla lost 1.2%.

Eight of the 11 major S&P 500 sectors rose in early trading, with energy leading gains, up 0.7%, on higher oil prices. [O/R]

The cyclicals-heavy Dow Jones was also boosted by gains in Visa, up 0.9%, after a report said the company and rival Mastercard, up 1.3%, were preparing to raise credit-card fees.

U.S.-listed shares of Chinese firms including PDD Holdings, JD.com, Baidu and Alibaba were mixed as U.S. Commerce Secretary Gina Raimondo talked up American firms’ desire to do business in China after having labeled it “uninvestible”.

At 9:52 a.m. ET, the Dow Jones Industrial Average was up 155.38 points, or 0.45%, at 35,008.05, the S&P 500 was up 15.61 points, or 0.35%, at 4,513.24, and the Nasdaq Composite was up 40.17 points, or 0.29%, at 13,983.93.

Shares of HP Inc slid 10.3% as the personal computer maker trimmed its annual forecast due to slowing demand.

Rite Aid dropped 2.8% after S&P Global Ratings downgraded the drug retailer on increased restructuring risks.

Texas Instruments fell 1.6% after Bernstein downgraded the analog chipmaker to “underperform” from “market perform”.

Brown-Forman fell 4.3% after the Jack Daniels whiskey maker missed its first-quarter sales and profit estimates.

Advancing issues outnumbered decliners by a 2.16-to-1 ratio on the NYSE and by a 1.22-to-1 ratio on the Nasdaq.

The S&P index recorded 21 new 52-week highs and no new low, while the Nasdaq recorded 25 new highs and 30 new lows.

(Reporting by Shristi Achar A and Amruta Khandekar in Bengaluru; Editing by Savio D’Souza and Vinay Dwivedi)