Wall Street unemployment data points to a cooling economy

Wall Street stocks rose at the open, as new U.S. unemployment data pointed to a cooling economy and pressure on the Federal Reserve to end its tightening campaign early.

The benchmark S&P 500 rose 0.1 percent, while the tech-heavy Nasdaq Composite added 0.3 percent in the opening hours.

Investors returned to technology, with the NYSE Fang+ index of the 10 most-traded technology stocks rising 0.3 percent, paring its losses from the previous session.

„Everything is slowing down, all returns are going down, but where are they going to be low? It’s usually growth companies, quality, maybe income, and certainly large cap”, said Marija Weidman, senior multi-asset strategist at State Street Global Markets.

The moves come after the U.S. Labor Department reported that new applications for unemployment benefits rose more than expected last week to the highest level since October 2021.

Initial state jobless claims totaled 261,000 for the week ended June 3, up 28,000 from the previous week’s revised level, indicating that higher interest rates are starting to take a toll on the nation’s businesses.

The central bank is set to hold its policy meeting next week, and markets have a 76.6 percent chance that policymakers will oppose raising interest rates this month.

The yield on the policy-sensitive two-year Treasury note was down 0.03 percentage points at 4.52 percent, and the yield on the 10-year note was at 3.79 percent. A rise in price reduces the returns on bonds.

Meanwhile, Europe’s regional Stoxx 600 and Germany’s Dax rose 0.1 percent, while France’s Cac 40 added 0.3 percent.

Downwardly revised figures released on Thursday showed the eurozone economy contracted over the past two quarters, with the group’s output falling at a quarterly rate of 0.1 percent in both three-month periods.

The new reading could weigh on policymakers at the European Central Bank, which meets the day after the central bank’s rate decision next week, which has previously signaled that the economy’s slowdown could leave room for raising the deposit rate above its current 3.25 percent.

In Britain, the yield on the two-year gilt fell 0.05 percentage points to 4.52 percent, retreating after hitting a peak last seen after September’s „mini-budget.”

Asian shares rose, with Hong Kong’s Hang Seng index adding 0.1 percent and China’s CSI 300 adding 0.8 percent. Japan’s Topix bucked the trend, falling 0.7 percent.