(Reuters) – U.S. stock indexes eyed a higher open on Friday after data showed a moderation in wage growth in May boosted bets that the Federal Reserve will skip raising interest rates this month, while the country averting a debt default added to cheer.
The Labor Department’s closely watched employment report showed unemployment rate at 3.7% in May against a forecast of 3.5%, while average hourly earnings were at 0.3%, down from 0.4% in April, highlighting a cooling in wage inflation.
Non-farm payrolls increased by 339,000 jobs vs. expectations of 190,000 additions.
“This is a reflection of a labor market that, while still robust, is softening gently, not rapidly. That’s exactly what the Fed would like to see,” said Art Hogan, chief market strategist at B Riley Wealth in New York.
“The Fed wants to tame inflation without crushing the jobs market, and this is another piece of evidence that they’re actually well along their way to getting that accomplished.”
The data brought relief to investors who now expect the Fed to skip an interest rate hike this month for the first time since starting its aggressive policy tightening more than a year ago.
Fed funds futures trading showed an over 70% probability that the Fed will hold interest rates steady at its June 13-14 policy meeting. [FEDWATCH]
Also lifting the mood, the Senate passed a bill late on Thursday to lift the government’s $31.4 trillion debt ceiling, avoiding a catastrophic, first-ever default.
At 8:52 a.m. ET, Dow e-minis were up 183 points, or 0.55%, S&P 500 e-minis were up 17.25 points, or 0.41%, and Nasdaq 100 e-minis were up 25.5 points, or 0.18%.
Lululemon Athletica (NASDAQ:LULU) Inc jumped 15.1% premarket upon raising its annual sales and profit forecasts on Thursday as wealthy Americans bought its pricey activewear despite high inflation.
This helped boost shares of sportswear companies in both the United States and Europe, with Dow Jones Industrial Average component Nike Inc (NYSE:NKE) up 3.4%. Germany’s Adidas (OTC:ADDYY) and Puma rose around 5% each in European trading.
Broadcom (NASDAQ:AVGO) Inc dipped 0.1% after reporting quarterly results.
The chipmaker forecast third-quarter revenue above market estimates. However, analysts said the outlook was disappointing, as expectations were stacked up against a blockbuster guidance provided by Nvidia (NASDAQ:NVDA) Corp last week. Shares of Nvidia, the world’s most valuable chipmaker, rose 0.7%.
Source: Economy - investing.com
