The US Department of Labor on Friday said that the economy added 215,000 jobs in July, fueling speculation among investors that the positive news could push the Federal Reserve to raise interest rates sooner than later.
Although the figure was 10,000 short of predictions, wages in July increased by 2.1 per cent, slightly hire than June’s 2 per cent growth.
A separate report on Friday showed that the unemployment rate remained at 5.3 per cent.
Falling US crude oil prices – below $44 a barrel before rising to $44.25 by 1pm, and Brent trading lower at $48.95 in Europe – coupled with strong dollar performance pulled major stocks down in New York.
By 1pm, the Dow Jones Industrial fell by 0.76 per cent to 17,287. The NASDAQ Composite dropped 0.81 per cent to 5015, while the SP 500 fell 0.63 per cent to 2070.
Despite Federal Reserve chief Janet Yellen’s statements that its monetary policy will likely remain highly accommodative for some time, the chance of a rate increase in September stood at 50 per cent, according to investors and traders who speculate on central bank policy.
These investors and traders ‘bet’ on Fed-Fund futures and, following Friday’s Labor Department jobs report, increased the chances of a September rate hike to 56 per cent.
Yellen, who said in mid-July that the Fed is likely to gradually raise interest rates by the end of this year, has also stressed that this would be determined on a “meeting by meeting” basis of the Federal Open Market Committee (FOMC).
In its July 29 meeting, the FOMC said it needed to see “some improvement” to market conditions before specifying a timeline for rate hikes.
The BRICS Post with inputs from Agencies