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Inflation

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Wall Street’s rally hit a wall after a surprisingly strong jobs report fueled worries about inflation and higher interest rates. The S&P 500 fell 1% Friday for its first drop in four days, though it took an up-and-down route to get there. The bond market was more decisive in thinking the strong jobs data could push the Federal Reserve to stay firm on high interest rates, which hurt the economy and markets. Treasury yields zoomed higher. Tech stocks also weighed on the market following profit reports that were weaker than expected. The Nasdaq gave back 1.6% and the Dow lost 0.4%.

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For nearly a year, the Federal Reserve has been on a mission to cool down the job market to help curb the nation’s worst inflation bout in four decades. The job market hasn’t been cooperating. Consider what happened in January: The government reported Friday that employers added a sizzling 517,000 jobs last month and that the unemployment rate dipped to 3.4%, the lowest level since 1969. The job gain was so large it left economists scratching their heads and wondering why the Fed’s aggressive interest rate hikes haven’t slowed hiring at a time when many foresee a recession nearing.

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Asian shares are trading mixed ahead of a closely watched U.S. jobs report that may affect global interest rates. Tokyo and Sydney advanced while Hong Kong and Shanghai fell. U.S. futures were mixed while oil prices were little changed. On Thursday, the S&P 500 rallied 1.5% a day after hitting its best level since August. Economists expect the jobs report to show a slowdown in hiring. Big tech companies have announced high-profile layoffs recently, but a report on Thursday suggested job cuts are not that widespread. Google’s parent company, Alphabet, jumped more than 7%, while Apple rose 3.7%. But they tumbled lower in afterhours trading after releasing results seen as disappointing by investors.

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Amazon has reported worse-than-expected profits but its revenue beat expectations boosted by sales in its cloud-computing unit AWS. Amazon said it earned $300 million, or 3 cents per share, in the October-December quarter. Industry analysts were expecting the Seattle-based company to earn 17 cents a share. It said its profits were dented by a $2.3 billion write-down of the value of its stock investment in electric vehicle start-up Rivian Automotive. Shares in Amazon.com Inc. fell 4% in after-hours trading. The earnings report closes a rough 2022 for Amazon. The company's stock lost nearly half of its value last year amid a broader sell-off of tech shares tied to rising inflation, interest rates and concerns about the wider economy.

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Asian stock markets have gained after the Federal Reserve said the U.S. economy is moving toward lower inflation but more interest rate hikes are planned. Shanghai, Tokyo, Hong Kong and Sydney advanced. Oil prices rose. Wall Street’s benchmark S&P 500 index closed 1% higher after the Fed raised its key lending rate by 0.25 percentage points, a smaller margin than previous increases. Chair Jerome Powell said the “disinflationary process has started” but “ongoing increases” in rates will be needed. That appeared to encourage investors who worry the Fed and European central banks might be willing to push the global economy into recession to cool inflation that is near multi-decade highs.

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The Federal Reserve extended its fight against high inflation by raising its key interest rate a quarter-point, its eighth hike since March. And the Fed signaled that even though inflation is easing, it remains high enough to require further rate hikes. At the same time, Chair Jerome Powell said at a news conference that the Fed recognizes that the pace of inflation has cooled  — a signal that it could be nearing the end of its rate increases. The stock and bond markets rallied during his news conference, suggesting that they anticipate a forthcoming pause in the Fed’s credit tightening.

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Asian stock markets are higher after Wall Street rose ahead of what traders hope will be the last Federal Reserve interest rate hike for some time. Shanghai and Hong Kong declined. Tokyo rose. Oil prices gained. Traders assume the Fed will announce rate hike of 0.25 percentage points but hope that will be the last for some time after U.S. wage growth slowed in late 2022. They worry U.S. and European rate hikes to cool inflation might tip the global economy into recession. Wall Street’s benchmark S&P 500 index gained after traders took the wage data as a sign the U.S. central bank might think its efforts to slow economic activity are taking effect.

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Asian shares are mostly lower in muted trading as investors await decisions on interest rates and on earnings reports from around the world. Traders were awaiting the U.S. Federal Reserve’s decision on interest rates, expected on Wednesday. They are also watching for indicators on the Chinese economy, the region’s key engine for growth. Benchmarks fell in Tokyo, Seoul, Hong Kong and Shanghai. Stocks fell on Wall Street ahead of a week full of potentially market-moving events. The S&P 500 dropped 1.3%. Several of the biggest U.S. companies will report their earnings this week. The monthly U.S. jobs report arrives Friday.

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Stocks closed higher on Wall Street, marking the market's third winning week in the last four. The S&P 500 rose 0.2% Friday after giving up most of an earlier gain. The Nasdaq composite climbed 0.9%, and the Dow ended up about 0.1%. American Express helped lead the way. It jumped after giving a profit forecast that topped expectations. Next week could be even busier for markets. The Federal Reserve is expected to announce its latest increase to interest rates. A report on Friday showed that inflation is continuing to cool, raising hopes for a smaller increase that's less painful.

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Asian shares have advanced, boosted by a rally on Wall Street following reports suggesting the economy and corporate profits may be doing better than feared. Markets remained closed in Shanghai for the Lunar New Year holidays. In Tokyo, data showed the core consumer price index was up 4.3%, slightly higher than expected at 4.2%, and higher than the Bank of Japan’s target of 2%. On Thursday, Wall Street stocks climbed to their highest level in nearly eight weeks after the Commerce Department reported that the U.S. economy expanded at a 2.9% annual pace in the last quarter, ending 2022 with momentum despite higher interest rates and widespread fears of a looming recession.

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The U.S. economy expanded at a 2.9% annual pace from October through December, ending 2022 with momentum despite the pressure of high interest rates and widespread fears of a looming recession. Thursday’s government estimate showed that the nation’s gross domestic product — the broadest gauge of economic output — decelerated last quarter from the 3.2% annual growth rate it had posted from July through September. Most economists think the economy will slow further in the current quarter and slide into at least a mild recession by midyear. The economy got a boost last quarter from resilient consumer spending and the restocking of supplies by businesses. Federal government spending also helped lift GDP.

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