US markets end higher, buoyed by optimism over Fed
The S&P 500 and Nasdaq closed higher on Wednesday as fresh economic data signaled a cooling US economy, reinforcing expectations the Federal Reserve will pause rate hikes in September. The S&P 500 index reached its highest in nearly three weeks after an ADP National Employment report showed private payrolls increased by 177,000 jobs in August, compared with estimates of 195,000, suggesting a softening labor market. Fresh gross domestic product numbers showed the US economy expanded 2.1 percent in the second quarter, slower than a preliminary estimate of a 2.4 percent growth. "Somewhat softer employment data is easing investor concerns for future Federal Reserve interest rate hikes," said Rob Haworth, a senior investment strategist at US Bank Wealth Management. The prospect of a "softer landing" for the US economy also supported demand for growth stocks and other riskier assets at the expense of defensive stocks, Haworth added. Mastercard and Visa gained after a report said the companies were preparing to raise credit card fees. HP tumbled after the personal computer maker trimmed its annual forecast due to slowing demand. Traders' bets on the Fed leaving interest rates unchanged in September stood at nearly 89 percent, up from 86 percent the day before, while bets of a pause in November rose to 54 percent from about 52 percent, the CME Group's FedWatch tool showed. US Treasury yields slipped to a near three-week low, with the 10-year yield last at 4.12 percent. The S&P 500 climbed 0.4 percent to 4,514. The Nasdaq gained 0.5 percent to 14,019, and the Dow Jones Industrial Average rose 0.1 percent to 34,890. Chipmaker Nvidia, Alphabet and Apple gained. Investors are now looking to 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. Trading activity has been light this week ahead of the US Labor Day holiday on Monday. Brown-Forman fell after the Jack Daniels whiskey maker missed its first-quarter sales and profit estimates. (Reuters)