Financial Markets                      01/09 15:45

   

   NEW YORK (AP) -- U.S. stocks hit records Friday following a mixed report on 
the U.S. job market, one that may delay another cut to interest rates by the 
Federal Reserve but does not slam the door on it.

   The S&P 500 climbed 0.6% and topped its prior all-time high set earlier in 
the week. The Dow Jones Industrial Average added 237 points, or 0.5%, and 
likewise set a record, while the Nasdaq composite led the market with a 0.8% 
gain.

   The moves came after the U.S. Labor Department said employers hired fewer 
workers during December than economists expected, though the unemployment rate 
improved and was better than expected. It reinforced how the U.S. job market 
may be in a " low-hire, low-fire" state and may hopefully avoid a recession.

   On Wall Street, power company Vistra soared 10.5% to help lead the market 
after signing a 20-year deal to provide electricity from three of its nuclear 
plants to Meta Platforms. Big Tech companies have been signing a string of such 
deals to electrify the data centers powering their moves into 
artificial-intelligence technology.

   Oklo jumped 7.9% after saying it also signed a deal with Meta Platforms that 
will help it secure nuclear fuel and advance its project to build a facility in 
Pike County, Ohio.

   Homebuilders and other companies involved in the housing market were strong 
in their first trading after President Donald Trump announced a plan to lower 
mortgage rates. Trump on late Thursday called for the purchase of $200 billion 
in mortgage bonds, similar to how the Fed in the past has bought bonds backed 
by mortgages to bring down mortgage rates.

   Builders FirstSource, a supplier of building products, jumped 12% for one of 
the biggest gains in the S&P 500 along with Vistra. Among homebuilders, Lennar 
rallied 8.9%, D.R. Horton climbed 7.8% and PulteGroup rose 7.3%.

   They helped offset a 2.7% drop for General Motors. The auto giant said it 
will take a $6 billion hit to its results for the last three months of 2025 
related to its pullback from electric vehicles. That's on top of the $1.6 
billion in charges GM took in the prior quarter. Fewer tax incentives and 
easier fuel-emission regulations have been eating into demand for EVs.

   WD-40 tumbled 6.6% after reporting a weaker profit for the latest quarter 
than analysts expected. Chief Financial Officer Sara Hyzer said the soft 
numbers were primarily because of timing issues, not weaker demand from end 
customers, and the company stood by its financial forecasts for the upcoming 
year.

   All told, the S&P 500 rose 44.82 points to 6,966.28. The Dow Jones 
Industrial Average added 237.96 to 49,504.07, and the Nasdaq composite climbed 
191.33 to 23,671.35.

   In the bond market, Treasury yields were mixed.

   Friday's improvement in the unemployment rate was enough to get traders to 
ratchet back expectations for a cut to interest rates at the Fed's next 
meeting, which is scheduled for later this month. Traders are now forecasting 
just a 5% chance of that, down from 11% a day before, according to data from 
CME Group.

   But traders nevertheless still largely expect the Fed to cut rates at least 
twice this upcoming year.

   Whether they're correct carries high stakes for financial markets. Lower 
interest rates can goose the economy and push up prices for investments, though 
they can also worsen inflation at the same time. And inflation has stubbornly 
remained above the Fed's 2% target.

   "Until the data provide a clearer direction, a divided Fed is likely to stay 
that way," according to Ellen Zentner, chief economic strategist for Morgan 
Stanley Wealth Management. "Lower rates are likely coming this year, but the 
markets may have to be patient."

   The yield on the 10-year Treasury eased to 4.16% from 4.19% late Thursday. 
It tends to track expectations for longer-term economic growth and inflation.

   The two-year Treasury yield, which more closely tracks forecasts for what 
the Fed will do with short-term interest rates in the near term, rose to 3.53% 
from 3.49%.

   A separate report released Friday morning suggested sentiment among U.S. 
consumers is strengthening, particularly among lower-income households. Perhaps 
more importantly for the Fed, the preliminary report from the University of 
Michigan also said expectations for inflation in the coming 12 months may be at 
their lowest level in a year. That could give it more freedom to cut interest 
rates.

   Hopes for both lower interest rates and a solid economy have helped other 
areas of the stock market climb recently, wresting leadership away from the Big 
Tech and AI stocks that dominated the market for years. The smaller stocks in 
the Russell 2000, for example, climbed 4.6% this week, much more than the 1.6% 
rise of the S&P 500.

   In stock markets abroad, indexes rose across much of Europe and Asia.

   The French CAC 40 climbed 1.4%, and Japan's Nikkei 225 jumped 1.6% for two 
of the world's bigger gains.

   ___

   AP Business Writers Chan Ho-him and Matt Ott contributed.

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