Wall Street is edging higher after reports suggested the US economy may be cooling, which could mean less fuel for inflation.
The S&P 500 was 0.4 per cent higher in afternoon trading, coming off a 1.4 per cent tumble that had sent it to its lowest level in four months. The Dow Jones is 0.2 per cent lower, a day after wiping out its gains for the year so far. The Nasdaq composite was 0.6 per cent higher. The Australian sharemarket is set to inch higher at the open, with futures at 4.51am AEDT pointing to a gain of 9 points at the open.
After already hiking its main interest rate to the highest level since 2001, the Fed has indicated it may keep its overnight rate higher next year than it had earlier expected. Treasury yields have correspondingly snapped higher as traders accept a new normal for markets of high rates for longer.
But “if Friday’s report also shows the labor market is cooling, stock investors may worry a little less about indefinitely higher interest rates,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office. Oil prices eased Wednesday to take some heat off inflation. Benchmark US crude tumbled 4.5 per cent to $US85.20 per barrel. It’s been pulling back since topping $US93 last week. Brent crude, the international standard, lost 4.5 per cent to $US86.79.Prices for crude have been generally charging higher from $US70 during the summer following announcements of cuts to production by some oil-producing countries.
A shutdown would drag on the US economy, raising the risk of a recession, though financial markets have held up relatively well through past shutdowns.
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