Wall Street seeks to digest the strong job creation in the US and its impact on rates

The Dow Jones index rises 0.2%, the Nasdaq, dominated by technology, loses 0.06% and the S&P 500 advances a timid 0.06%.

The Federal Reserve is much less likely to start cutting interest rates as soon as September, traders were betting on Friday, after a US government report showed that Employers will create many more jobs and pay higher wages than expected in May.

Nonfarm payrolls increased by 272,000 last month, above the 185,000 expected, and average hourly earnings grew by 4.1% compared to the previous year, exceeding the 3.9% increase that economists had predicted. March wage data was also revised upward to show that hourly earnings rose 4%, instead of the 3.9% previously reported.

Following the report, futures contracts that track the Federal Reserve’s policy rate now imply a 53% probability of a cut in the cost of credit from the current range of 5.25%-5.5% for Septembercompared to a probability of around 70% seen before the report.

U.S. central bankers have said they plan to wait for rate cuts until they are more confident that inflation is declining toward its peak. 2% target. But if anything, Friday’s wage data suggests that pressures are pushing prices in the opposite direction.

Although the unemployment rate unexpectedly rose to 4%, from 3.9% previously, The huge surge in job creation defied expectations that the labor market is cooling in a way that could help the Fed’s fight against inflation.

Rate futures show traders now less confident the Fed will implement more than a single rate cut by the end of the yearand they rate roughly an equal chance of two rate cuts by the end of 2024, down from a chance of around 68% seen before the report.