ASX set to rise, tech stocks weigh on Wall Street

Most US stocks are rising after the latest update on the job market suggested the Federal Reserve may feel less pressure to hike interest rates. But more swings for chip stocks and other winners of the artificial-intelligence boom are keeping indexes mixed.

The S&P 500 fell 0.4 per cent, even though two out of every three stocks within the index were rising. The Dow Jones was up 297 points, or 0.6 per cent, and the Nasdaq composite was 1.1 per cent lower after erasing an early gain. The Australian sharemarket is set to 29 points, or 0.3 per cent, at the open. The ASX was flat on Thursday. The Australian dollar was stronger at US69.18¢.

Stocks broadly got some help from easing Treasury yields in the bond market, which fell after a report from the US government said employers added 57,000 jobs to their payrolls last month. That’s growth, which is good for the economy, but it was also short of the 100,000 jobs that economists expected and a slowdown from May’s hiring pace.

The weaker-than-expected result could keep pressure off inflation, which has been accelerating worldwide because of jumps in oil prices caused by the war with Iran. And if inflation slows in upcoming months, now that oil prices are back below where they were before the war, the Federal Reserve may feel less need to raise interest rates several times this year.

That would be a relief for investors, who tend to love lower interest rates because they can give the economy a boost by making it cheaper for US households and businesses to borrow money and spend. Lower rates also tend to push upward on prices for stocks and other investments.

The yield on the 10-year Treasury got to 4.50 per cent in the morning, up from 3.97 per cent just before the war. But after the release of the US hiring data, it fell back to 4.49 per cent.

The two-year Treasury yield, which more closely tracks expectations for the Fed, fell more sharply. Traders now see an 82 per cent chance that the Fed and its new chairman, Kevin Warsh, will not raise the federal funds rate at its next meeting later this month. That’s up from the 71 per cent chance seen a day earlier, according to data from CME Group.

“The labor market isn’t overheating,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management. He said the data could allow the Fed to wait through the summer to get more clues about how inflation is behaving before having to decide on hiking rates.

On Wall Street, the company behind LaCroix sparkling waters helped lead the market and climbed 13.4 per cent after National Beverage said it will pay a special dividend of $US3.25 for each share that investors hold.

Dollar Tree rose 1.9 per cent after the retailer said it approved a program to send up to $US2.5 billion to its shareholders by buying back its stock.

Stocks of companies in the crypto industry were also strong after the price of bitcoin rose roughly 2.6 per cent, a day after dropping near its lowest level since 2024. Robinhood Markets rose 3.2 per cent, and Coinbase Global gained 3.6 per cent.

But more drops for computer chip companies weighed on indexes. They’ve come under pressure because of worries that their stock prices shot too high in the frenzy around AI and that all the spending on chips and data centres may not result in as much profit and productivity growth as hoped.

Memory maker Micron Technology erased an early gain to drop 7 per cent, a day after plunging 10.6 per cent. Nvidia fell 2.4 per cent, and Applied Materials sank 10 per cent. They were some of the heaviest weights on the S&P 500 because they’ve grown so huge in size amid AI mania.

In stock markets abroad, continued drops for chip companies sent indexes sharply lower in several Asian markets. South Korea’s Kospi index sank 7.9 per cent due to losses for chip companies like SK Hynix. That’s its worst drop since a 10 per cent plunge a little more than a week ago.

Indexes also fell 2.5 per cent in Tokyo and 2 per cent in Shanghai.

European indexes were stronger, and France’s CAC 40 rallied 1.7 per cent.

In the oil market, prices continued to ease on hopes for negotiations for a permanent end to the war with Iran. Brent crude, the international standard, dipped 0.1 per cent to $US71.49 per barrel.