Wall Street rises to highs ahead of U.S. employment report

The U.S. stock market rose to highs on Thursday as investors awaited the next Federal Reserve move ahead of crucial employment data on Friday.

The S&P 500 gained 0.5% in New York, adding to recent records as traders weigh in on corporate earnings forecasts with concerns that the Fed will cut its monthly bond purchases that have sustained corporate prices. active throughout the pandemic. The technology-focused Nasdaq Composite index rose 0.1 percent, after trading lower the previous day.

The dollar index, which measures the greenback against global peers, rose 0.1 percent to its highest level since early April. This change helped bring the pound sterling and the euro to a two-month low against the dollar, at $ 1.3761 and $ 1.1846, respectively.

The moves came ahead on Friday in the monthly report on non-farm payrolls, in which economists surveyed by Bloomberg expect employers to add about 700.00 jobs in June, up from 559,000 a month earlier.

“The only thing I think would surprise the markets if there is a continuing error, because we’ve had two failures in a row,” said Jurrien Timmer, global macro director at Fidelity Investments. “It’s about how quickly employers come out to hire workers and that’s an important point for the Fed. . . because if they try to normalize politics, but companies still don’t hire a lot of people, it’s a sign that maybe they should hold on ”.

Fed Chairman Jay Powell pledged to maintain supportive monetary policy until the labor market is cured of pandemic shocks. However, at their last meeting, central bank policymakers raised growth and inflation forecasts for the United States and advanced projections of the first post-pandemic rate hike a year to 2023 .

“The market could get nervous” by a large number of payrolls, “given the relatively falconry stance the Fed took last month,” said Lale Akoner, senior market strategist at BNY Mellon.

But investors were also prepared to wait for “the Fed to talk about this. . . it quickly puts the unrest aside, ”Akoner added, after central bank officials said calmed the nerves of investors following the June meeting with guarantees that it was too early to raise rates.

The yield on the 10-year Treasury bond benchmark, which has been slashed by Fed bond purchases since last March, rose to 1.45%.

In Europe, the Stoxx 600 equity index closed 0.6% as traders avoided the complex outlook for US assets to focus on the nascent economic recovery in the eurozone after the crisis of the Covid-19.

Energy stocks topped the region-wide benchmark as the price of Brent crude rose 1% to a high of $ 75.38 a barrel. Analysts expected only the group of oil-producing countries gradually increase production, even when economies around the world open up after the pandemic.

“The oil industry has experienced a lot in the last seven or eight years,” said Sean Naughton, senior vice president of equities at RBC Wealth Management. “It has been a difficult space, but I think there have been many improvements in the sector in terms of slate production in the United States. This could keep the supply under control. I think demand is improving in the United States and globally for incremental oil, so I think there is a relatively good underlying case that oil continues to rise. ”

The global oil benchmark was near its highest level since October 2018, while the West Texas Intermediate, the US, rose 1.8% to $ 74.75 on barrel.

For the most recent quarter, which ended Wednesday, European stocks tracked U.S. markets, with the S&P 500 rising 8.2% against a 5.4% increase for the Stoxx 600.

“Europe has lagged behind the United States in terms of managing the virus and its economic recovery, but it is now improving, so it attracts foreign capital, while European investors are also looking inward,” said Olivier Marciot, manager of fund between Unigestion assets.

Eurozone gross domestic product contracted in the first three months of this year, while the United States achieved quarterly growth of 1.6%. It is expected to have the common currency block grew again in the second quarter, despite this.

Investors also believe that the European Central Bank maintains its emergency emissions purchase program for longer than its US counterpart. “The real GDP of the eurozone will be slightly higher than the United States in 2022,” Jefferies strategist Sean Darby wrote in a research note.

“The ECB will be much later in shrinking and hardening than the Fed.”