Stocks are rising and yields are falling as new data suggests the labor market is cooling

• U.S. stocks closed higher, while the 10-year Treasury bond fell on Tuesday.

• Tuesday’s JOLTS report showed vacancies reaching their lowest level in more than three years.

• That eases the pressure on the Fed to keep interest rates high.

The major U.S. stock averages closed on Tuesday as investors noted the latest signs of a cooling economy and bet on the increased likelihood of rate hikes later this year.

Tuesday’s JOLTS report from the Bureau of Labor Statistics showed that U.S. job openings reached their lowest level in more than three years, reaching 8.059 million job openings in April.

That reinforces expectations that the Federal Reserve will cut interest rates, as futures markets see higher chances of a policy turnaround in September.

The cooling labor also fueled a rally in U.S. Treasuries, with yields on the 10-year benchmark falling more than seven basis points.

“With the labor market red-hot in 2022, Fed officials worried that pressure on wage prices could cause inflation to spiral out of control,” said Comerica’s chief economist Bill Adams. “Most labor indicators now point to a significantly cooler labor market. That’s why Chairman Powell addressed this as inflation accelerated in the first half of the year and said further rate hikes were unlikely.”

More labor data is scheduled for Friday, when the long-awaited May payroll figures are released. Consensus estimates expect 178,000 jobs to be added that month, in line with April figures.

According to Bank of America, a reading of 125,000-175,000 would be the optimal range, indicating continued strength without the need to keep rates high for longer. The bank said a reading in that range would be a catalyst for further gains in the stock market.

Here’s where the US indexes stood at 4pm on Tuesday:

Here’s what else happened today:

The story continues

In commodities, bonds and crypto:

• West Texas Intermediate crude fell 1.2% to $73.3 a barrel. Brent crude, the international benchmark, rose 0.4% to $77.62 per barrel.

• Gold fell 1.02% to $2,326 an ounce.

• The yield on ten-year government bonds fell by seven basis points to 4.33%.

• Bitcoin rose 2.8% to $70,738.

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