Treasury yields rose and stock indexes were mostly slightly higher on Wednesday afternoon after data showed the U.S. economy created far more jobs than expected in January, which could make it more difficult for the Federal Reserve to keep cutting rates this year.
Labor Department data showed 130,000 workers were added to nonfarm payrolls in January, well above forecasts for a rise of 70,000, while both November and December were revised down a touch.
The unemployment rate ticked lower to 4.3% from 4.4% in December, below forecasts for a reading of 4.4%.
“January’s employment report was a blockbuster with improvement across the board,” Eric Merlis, co-head of global markets at Citizens in Boston, said in an email.
“A lower unemployment rate without any significant wage acceleration is exactly what the Fed wants to see, and it should solidify the case for holding rates steady in March.”
Market expectations for a Fed cut of at least 25 basis points at the central bank’s March meeting had risen to about 20% before the jobs data, and were back to a roughly 6% after the report, according to CME’s FedWatch Tool.
The Dow Jones Industrial Average fell 19.92 points, or 0.04%, to 50,169.46, the S&P 500 rose 13.23 points, or 0.18%, to 6,955.04 and the Nasdaq Composite rose 21.86 points, or 0.10%, to 23,124.33.
Energy shares were higher along with oil prices.
In Europe, trading was dominated by jitters about artificial intelligence disruption, this time sweeping shares in asset managers lower, having hit the insurance and software sectors in the last week. Europe’s benchmark STOXX 600 index hit a record high, with the index ending 0.1% higher.
MSCI’s gauge of stocks across the globe rose 3.01 points, or 0.29%, to 1,057.73.
The dollar index was down after rising following the jobs report. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.12% to 96.80, with the euro down 0.1% at $1.1882.
Against the Japanese yen, the dollar weakened 1.02% to 152.79. The yen has rallied over the past few days, marking a potential shift in investor thinking since Sunday’s landslide election victory for Japan’s Prime Minister Sanae Takaichi.
In other currencies, the Australian dollar rose to a three-year high after Reserve Bank of Australia Deputy Governor Andrew Hauser said inflation was too high and policymakers were committed to doing whatever was necessary to bring it to heel. The Australian dollar strengthened 0.88% versus the greenback to $0.7136.
The yield on benchmark U.S. 10-year notes rose 2.7 basis points to 4.172%, from 4.145% late on Tuesday.
U.S. crude rose 67 cents to settle at $64.63 a barrel. Brent was also higher. Spot gold rose 1.32% to $5,089.35 an ounce.
(Reporting by Caroline Valetkevitch in New York and Amanda Cooper in London)
