Wall Street bets on Fed interest-rate hike, but not in June

BLOOMBERG

Wall Street’s reaction to the latest jobs report showed bets that another Federal Reserve interest-rate hike is likely in the bag — but that wouldn’t necessarily happen in June.
As Treasury yields climbed, swap contracts projected officials will probably wait until next month to tighten again. The possibility of a Fed pause, more signals that the economy is still in good shape and another rally in big tech helped push the stock market higher.
The US labour market sent conflicting signals in May as payrolls surged along with joblessness. Nonfarm payrolls increased 339,000 in May after an upwardly revised 294,000 advance in April. The unemployment rate rose to 3.7%, while wage growth slowed.
“The key question now is: can they wait until July or does this monster payrolls number trigger another burst of urgency?” said Seema Shah, chief global strategist at Principal Asset Management. “Perhaps the report details, with the unemployment rate rising and average hourly earnings growth slowing, tilts the decision to July.”
Two-year yields, which are more sensitive to imminent central bank moves, climbed 13 basis points to 4.47%. The S&P 500 rose toward the highest since August and was on track for its third weekly advance.
In corporate news, Amazon.com Inc has been talking with wireless carriers about offering low-cost or possibly free nationwide mobile phone service to Prime subscribers, according to people familiar with the situation.
Broadcom predicted that sales tied to artificial intelligence will double this year, but the chipmaker remains mired in a broader slowdown.
The buzz around AI has investors pouring a record amount of money into tech stocks, according to Bank of America Corp. A “baby bubble” in AI was the dominant market theme in May, strategist Michael Hartnett said, with tech funds attracting an all-time high of $8.5 billion in the week through May 31, according to the bank citing EPFR Global data.
The S&P 500 rose 0.9% in New York. The Nasdaq 100 rose 0.4%. The Dow Jones Industrial Average rose 1.3%. The Stoxx Europe 600 rose 1.3%. The MSCI World index rose 1.2%.
The yield on 10-year Treasuries advanced seven basis points to 3.66%. Germany’s 10-year yield advanced six basis points to 2.31%.
West Texas Intermediate crude rose 2.3% to $71.73 a barrel. Gold futures fell 0.8% to $1,979.90 an ounce.