Wall St. rises as weak job data bolsters rate cut optimism


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Wall St. rises as weak job data bolsters rate cut optimism

On Wednesday, the 5th of June 2019, all three key indexes of Wall St. had surged, while investors had been betting on an interest rate cut in context of weak US private job data that had displayed its slowest growth in nine years on May.

Concomitantly, hopes of a near-term resolution of US-Mexico tariff dispute had also rekindled hopes for US investors. Latest gains on Wall St. had extended winning streak on Tuesday (June 4th) after Fed Chair Jerome Powell had erased ‘patient stance’ of his speech and added that the US Central Bank might need to react based on the tumultuous geo-political circumstances involving a gruesome trade war with China that appeared to be taking a malignant shape, boosting rate cut hopes.

Aside from that, ADP National Employment report released on Wednesday (June 5th) had further heightened hopes of a rate cut, as US private jobs had grown at its slowest pace in more than nine years on May, a weakness that was likely to be resulted from a rumbling trade spat with China.

Adding that the market would be looking forward to Friday’s (June 7th) job data, while a strong data would likely to evaporate a rate cut hope and jolt the market downwards, chief global investment strategist at Charles Schwab in Boston, Jeffrey Kleintop said, “Today and yesterday the market was embracing the idea of more weakness in the economy giving the Fed some cover to preemptively cut rates.

If the excuse evaporates with a strong jobs number Friday the market might be disappointed”. Citing statistics, on Wednesday’s (June 5th) market closure, Dow gained 0.82 percent to 25,539.57, and S&P 500 surged 0.82 percent to 2,826.15, while Nasdaq rose 0.64 percent to 7,575.48.