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At the same time, spending by US consumers strengthened by more in December than expected. That helped calm worries that a resilient US economy, which has so far refused to fall into a long-predicted recession, would mean upward pressure on inflation.
The expectation is for the labor market to soften some in upcoming months, which would further cool pressure on inflation, but not enough to halt the economy’s growth. That has the market looking forward to what EY Chief Economist Gregory Daco calls “the ‘holy grail’ of non-inflationary growth.”
Treasury yields yo-yoed in the bond market following the report but later rose modestly. The yield on the 10-year Treasury edged up to 4.13 per cent from 4.12 per cent late Thursday.
The Federal Reserve’s next meeting next week will likely end with no change to interest rates, but traders are split on whether it could begin cutting rates in March. That would be a sharp turnaround from the last two years, when the Fed hiked its main interest rate to the highest level since 2001. It’s trying to slow the economy and hurt investment prices enough through high interest rates to get inflation fully under control.
Traders are betting the Fed will cut interest rates as many as six times this year, according to data from CME Group. That would be double what the Fed itself has indicated.
Critics say that overzealousness may be setting financial markets up for disappointment after their big rallies in recent months.
For now, though, the mood is still mostly ebullient on Wall Street.
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American Express jumped 7.1 per cent for the biggest gain in the S&P 500, even though it reported weaker results for the latest quarter than expected. It gave forecasts for revenue and profit for the full year of 2024 that were stronger than analysts’, while also announcing plans to boost its dividend payout to investors.
Colgate-Palmolive climbed 2 per cent after the company in control of more than 40 per cent of the global toothpaste market reported stronger profit and revenue for the latest quarter than analysts forecast.
JetBlue Airways rose 3.6 per cent after it said it may end its bid to buy rival Spirit Airlines as soon as this weekend. A federal judge has already blocked the deal because of worries it could lead to higher fares for customers, which both airlines had said they intended to appeal.
Spirit’s stock tumbled 13.4 per cent to bring its loss for the year so far to nearly 62 per cent.
In stock markets abroad, indexes were higher across much of Europe but mixed in Asia.
Hong Kong’s Hang Seng slumped 1.6 per cent to give back some of its strong gain for the week, which was spurred by Chinese authorities’ moves to stabilise markets and the world’s second-largest economy. Japan’s Nikkei 225 fell 1.3 per cent to pare its big gain for the year so far.
AP
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