Wall Street surges on debt deal, wage hopes
US stocks closed higher on Friday after a labour market report showing moderating wage growth in May indicated the Federal Reserve may skip a rate hike in two weeks, while investors welcomed a Washington deal that avoided a catastrophic debt default. The tech-heavy Nasdaq index surged to a 13-month intraday high and posted its sixth-straight week of gains that marked its best winning streak since January 2020. US job growth accelerated in May but a surge in the unemployment rate to a seven-month high of 3.7 percent as more people looking for employment indicated labour market conditions were easing, the Labor Department said. The jump in the unemployment rate from a 53-year low of 3.4 percent in April reflected a drop in household employment and a rise in the overall workforce. A bigger labour pool is easing pressure on businesses to raise wages and helping decelerate inflation. "While it appears to be a hot number on the actual number of people employed, the wage rate is not increasing as fast," said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh. "That is a softening effect and is this the mythical soft landing? Looks like that." The data brought relief to investors who mostly expect the Fed to pause hiking rates at its policy meeting on June 13-14. It would be the first halt since the Fed started its aggressive anti-inflation policy tightening more than a year ago. But some pointed to the much hotter-than-expected jobs data as a sign the Fed still has not yet tamed inflation. "Our view is and has been that the market is completely wrong on assessing what the Federal Reserve is doing," said Phil Orlando, chief equity strategist at Federated Hermes in New York. "The market's perception is that this economy was going to cool, inflation was going to collapse and the Fed was going to turn around and start cutting interest rates. That's wrong."Markets now await data on key consumer prices a day before the Fed's rate decision in two weeks. The Senate passing a bill late on Thursday to lift the government's US$31.4 trillion debt ceiling avoided what would have been a catastrophic, first-ever default. The Dow Jones Industrial Average rose 2.12 percent, to 33,762.76, the S&P 500 gained 1.45 percent, to 4,282 and the Nasdaq Composite added 1.07 percent, to 13,240.77. For the week, the S&P 500 rose 1.82 percent, the Dow added 2.02 percent and the Nasdaq gained 2.04 percent. (Reuters)