U.S. stock indexes held steady Friday after a mixed report on U.S. jobs showed the heart of the economy slowed last month, but not dramatically, as President Donald Trump’s trade war intensified.
The Labor Department’s jobs report is usually the most anticipated piece of data for markets each month, but it’s grown even more prominent because investors want to see if strong spending by households can continue to prop up the economy. Employers added fewer jobs than economists expected last month, which could hamper that growth. But more people entered the workforce, and wages rose more than expected.
Economists said the report did little to change their forecasts for the Federal Reserve to cut interest rates at its meeting in two weeks. Treasury yields dipped following the report, and traders remain nearly certain that the Fed will cut short-term rates by a quarter of a percentage point.
It would be the second such cut since August, following nine increases in prior years, as the central bank tries to cushion the blow on the economy from the U.S.-China trade war. U.S. manufacturing has already slid due to the tensions, and the worry is that businesses could pull back on their spending next.
Lower interest rates make borrowing cheaper and can help boost economic activity. They also can goose stock prices higher by making them more attractive than bonds.
Earlier in the day, China’s central bank cut a key interest rate, which helped push Asian markets higher.
KEEPING SCORE: The S&P 500 was virtually flat as of 10:09 a.m. Eastern time, after drifting between a gain of 0.1% and a loss of 0.1% in the minutes following the opening of trading.
The Dow Jones Industrial Average rose 21 points, or 0.1%, to 26,749, and the Nasdaq slipped 0.2%.
JOBS REPORT: Employers added 130,000 jobs last month, short of the 160,000 that economists expected and down from July’s growth of 159,000. But average hourly earnings rose 3.2% from a year earlier, more than economists expected.
Strong spending by households has been the economy’s driving force, even as manufacturers struggle under the weight of increased tariffs. Manufacturing slowed last month for the first time in three years, according to a survey by the Institute for Supply Management.
Investors have grown increasingly worried about whether consumer spending can remain strong enough to keep the economy from tipping into a recession for the first time in a decade.
A RARE QUIET DAY: Markets have been turbulent in recent weeks as worries about the trade war have waxed and waned. Between Aug. 1 and Thursday, just over half of all trading days saw the S&P 500 swing by more than 1%.
The latest escalation kicked in Sunday, with the U.S. imposing 15% tariffs on $112 billion of Chinese imports. Washington is planning to hit another $160 billion on Dec. 15, a move that would extend penalties to almost everything the United States buys from China. Beijing responded by imposing duties of 10% and 5% on a range of American imports.
U.S. tariffs of 25% imposed previously on $250 billion of Chinese goods are due to rise to 30% on Oct. 1.
The S&P 500 has remained stuck between roughly 2,840 and 2,940 since the start of August, but it broke above that range this week after U.S. and Chinese officials agreed to hold talks in Washington next month. The S&P 500 is at its highest level in five weeks and just 1.6% below its record set on July 26.
YIELDS: Treasury yields fell following the release of the jobs report. The yield on the 10-year Treasury dipped to 1.55% from 1.56% late Thursday. The two-year yield slipped to 1.52% from 1.53%, and the 30-year yield fell to 2.03% from 2.05%.
MARKETS ABROAD: China’s Shanghai Composite rose 0.5%, Japan’s Nikkei 225 gained 0.5% and South Korea’s Kospi added 0.2%.
European markets were mixed, with France’s CAC 40 down 0.1% and Germany’s DAX up 0.2%. The FTSE 100 in London slipped 0.2%.
AP Business Writers Yuri Kageyama and Matt Ott contributed to this report.
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