US stocks edge higher after US job data

<p>The market is bouncing back from a large sell-off on Friday</p>

US stocks opened higher this morning (March 9th), bouncing back from a large sell-off on Friday, following the publication of better-than-expected US job data.

The Standard & Poor's 500 index edged up 0.1 per cent to 2,074 as of 09:50 ET in New York today. The Dow Jones industrial average gained 0.3 per cent to 17,912 points, while the Nasdaq composite remained flat at 4,927.

US non-farm payrolls – released on Friday – showed that the US added 295,000 jobs in February, beating forecasts of a 235,000 increase, despite severe winter weather. This renewed speculation of an early interest rate hike from the Federal Reserve, as soon as June, which led stocks to tumble late last week.

The unemployment rate fell by two tenths of a percentage to 5.5 per cent, from 5.7 per cent in January, compared to estimates of 5.6 per cent. However, average hourly earnings increased by 0.1 per cent month-on-month in February, missing projections for a 0.2 per cent gain, after a 0.5 per cent climb the prior month.

"All in all another strong set of labour market data that supports the case for an end to zero-interest-rates, which we expect to come in July with a first Fed rate hike by 25bp," Christian Schuluz, analyst at Berenberg, told IFA magazine.

A data dependent decision

The Fed has held interest rates close to zero for more than six years in a bid to revive the US economy after the financial crisis.

US Federal Reserve Chair Janet Yellen's said at the end of February that the central bank would be patient about raising interest rates, as the job market is still healing and inflation is too low. 

She added that that the Fed is preparing to consider increases "on a meeting-by-meeting basis," and that she and her colleagues would provide markets with a clearer signals before they moved.

In another statement released late last year, she declared that the Fed will continue to anticipate that "it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time".

"If the events surprise us and we are moving more quickly toward our objectives and the Committee sees a need to move sooner, or later depending on what the data is… I do feel we have the flexibility to move. As I have said repeatedly, the decisions that the committee makes about what is the appropriate time to begin to raise its target for the federal funds rate will be data dependent," she added.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.