ASX set to jump, Wall Street rebounds

Stocks rose on Wall Street as more US companies turn in their latest quarterly reports and several economic updates shed some light on the US economy.

The S&P 500 rose 0.5 per cent. The Dow Jones rose 62 points, or 0.1 per cent, as of 11:35 a.m. Eastern time. The Nasdaq composite rose 0.8 per cent. The Australian sharemarket is set to climb, with futures at 4.54am AEDT pointing to a rise of 76 points, or 0.9 per cent, at the open. The ASX dipped by 0.1 per cent on Wednesday. The Australian dollar was trading at $US65.05¢ at 5.05am AEDT.

Wall Street rose across the board overnight. Credit: Bloomberg

The gains mark a reversal from the prior day’s dip as big technology stocks once again lead the broader market. Nvidia rose 1.6 per cent and Google’s parent, Alphabet, jumped 2.4 per cent. Their huge values give them outsized influence over the market.

Several big industrial companies also helped lift the market. Companies from a broad spectrum of industries reported their latest financial results and gave updated forecasts.

McDonald’s rose 2 per cent after reporting that its sales benefited from the return of its popular Snack Wraps in the third quarter. International Flavours & Fragrances jumped 4.7 per cent after beating Wall Street’s latest quarterly profit forecasts.

Loading

On the losing side, Taser maker Axon Enterprise slumped 11.9 per cent after forecasting weaker profits than analysts were expecting. Live Nation Entertainment fell 7.8 per cent after its latest results fell short of analysts’ forecasts.

The latest round of earnings offers Wall Street a source of information on consumers, businesses and the economy that is otherwise lacking amid the government shutdown. Important monthly updates on inflation and employment have ceased, leaving investors, economists and the Federal Reserve without a fuller picture of the economy.

There are still several informative private economic updates that Wall Street can review.

A monthly report from ADP showed that private payrolls rose more than expected in October. The report offers a partial glimpse into the job market, which has been generally weakening and raising broader concerns about economic growth.

The services sector, which is the largest part of the US economy, expanded in October more than Wall Street expected, according to the Institute for Supply Management. The report shows that while overall business activity grew, employment was still contracting.

“The survey provides a reassuring sign that economic growth persisted in October despite the government shutdown,” Bill Adams, chief economist for Comerica Bank, wrote in a note to investors.

A weaker job market remains a big concern for the Fed. The central bank cut its benchmark rate for the second time this year at its most recent meeting, in part to help bolster the economy amid a weakening job market. Fed Chair Jerome Powell and several other Fed officials have expressed concerns about more rate cuts, as inflation remains stubbornly high and could be fuelled by lowering rates.

The mix of a weaker job market and hot inflation leaves the Fed in a tough position.

“For Fed watchers, this ADP report should make it clear that a December rate cut is now in play,” said Jamie Cox, managing partner for Harris Financial Group, in a note to investors. “We are nearing stall speed in the labor market, and that will get the Fed’s attention.”

Loading

Wall Street has tempered its expectations for another interest rate cut in December. Investors are now forecasting a 65 per cent chance that the Fed will cut interest rates, according to CME FedWatch. That’s down from a 90 per cent chance just prior to the previous rate cut.

Treasury yields rose in the bond market. The yield on the 10-year Treasury rose to 4.15 per cent from 4.09 per cent late Tuesday. The yield on the two-year Treasury rose to 3.62 per cent from 3.58 per cent late Tuesday.

European markets gained ground and Asian markets closed mostly lower.

Most Viewed in Business

Loading