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Wall Street stocks rose on Wednesday as weak gross domestic product and labor market data from the United States added to signs that the world’s largest economy is slowing, making an interest rate increase less likely.
The Wall Street S&P 500 rose 0.3 percent, and the technology-focused Nasdaq Composite rose 0.4 percent as investors were optimistic about new data indicating a slowdown in the US economy.
The gains came after a revised reading of US gross domestic product showed that the economy expanded by 2.1 percent in the second quarter of this year, down from the initial estimate of 2.4 percent.
Meanwhile, a separate report from ADP National Employment on Wednesday showed that private payrolls rose by 177,000 jobs last month, below the 195,000 forecast of economists polled by Reuters.
The latest releases added to a raft of data this week that made clear the pressure rising interest rates are putting on the US economy, raising the chances that the central bank will pause its tightening campaign soon.
A day earlier, weak US labor market data prompted a rally on Wall Street, showing the number of new job openings falling to their lowest level in more than two years.
In government debt markets, yields on two-year US Treasury bonds lost 0.03 percentage point to 4.86 percent, while yields on benchmark 10-year bonds fell 0.02 percentage point to 4.1 percent. Bond yields rise as prices fall.
Meanwhile, the euro rose 0.5 percent against the dollar after Germany’s preliminary inflation reading showed that coordinated consumer prices rose at an annual rate of 6.4 percent in August, beating analysts’ expectations of 6.3 percent.
The report pushed the yield on interest rate-sensitive two-year German government bonds by 0.02 percentage point to 3.05 percent. Bond yields rise when rates fall.
“Today’s reading is a clear sign that German inflation remains stubborn,” said Tom Hopkins, portfolio manager at BRI Wealth Management. “Investors are now betting that it is increasingly likely that the European Central Bank will raise interest rates next month.”
Investors expect a roughly 50 percent chance that the European Central Bank will raise interest rates at its next policy meeting in September, according to data compiled by Refinitiv and based on interest rate derivative quotes.
The pan-European Stoxx Europe 600 index fell 0.1 percent at the close, after oscillating between slight gains and losses throughout the day. The French CAC 40 index fell by 0.1 percent, and the German DAX index fell by 0.2 percent.
Adding to this trend, Spain’s annual price growth rate accelerated to 2.4 percent in August, compared to 2.1 percent in the previous month, according to data on Wednesday.
But in Australia, new inflation data showed that the annual pace of consumer price increases slowed to 4.9 per cent in July, down from 5.4 per cent the previous month, and below market expectations of 5.2 per cent.
Markets now place a 99.7 per cent probability that the Reserve Bank of Australia will keep interest rates steady for a third straight month in September.
The S&P/ASX 200 index ended the day up 1.2 per cent. China’s benchmark CSI 300 index and Hong Kong’s Hang Seng index were flat.