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The number of Americans filing for unemployment benefits rose last week from the previous week, while economists had expected a slight decline in claims. The number is still low compared with history, but it could indicate a slowdown in the job market.
Wall Street actually wants such a slowdown. That’s because a cooling could reduce inflation and convince the Federal Reserve to deliver the rate cuts that traders want. The danger is that if the slowdown becomes too much and turns into a recession, it could end up hurting stock prices.
Another report on Thursday that U.S. workers were not as productive as economists thought in the first three months of the year could have a negative impact on the market. This is critical because strong productivity growth could keep wages rising for American workers without putting too much upward pressure on inflation.
Treasury yields remained relatively stable following the economic report. The 10-year Treasury yield rose to 4.29% from 4.28% late Wednesday.
The two-year yield, which is more influenced by expectations of Fed action, fell to 4.72% from 4.73% late Wednesday.
On Wall Street, Lululemon Athletica shares rose 5.5% after the company reported better-than-expected profit in its latest quarter, largely due to strong sales outside the Americas. JM Smucker shares rose 5.4% after its Uncrustables and Jif peanut butter brands also beat earnings estimates.
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Robinhood Markets shares rose 7.5% after the company announced it had agreed to acquire cryptocurrency exchange Bitstamp. Robinhood said the deal, which still requires regulatory approval, would attract customers from around the world, including in the European Union and Asia.
Nvidia reversed early gains to fall 2.1% on the day, becoming the third company to pass $3 trillion in market value as the chip company rides a wave of enthusiasm for artificial BroadCast Unitedligence technology.
The highlight of the week is likely to come on Friday, when the U.S. government releases its latest monthly jobs market data, with economists expecting a slight acceleration in hiring and average hourly earnings from the previous month.
As of now, few expect the Fed to make any interest rate changes at its meeting next week. But there are still hopes that the Fed will cut its main interest rate at least once this year, leaving it below its highest level in more than two decades.
European stock indexes rose slightly on the widely expected decision. Asian stocks were mixed, with Tokyo up 0.6% and Shanghai down 0.5% as Seoul was closed for a holiday.
Associated Press
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