(Updates to U.S. market open, changes dateline to NEW YORK from LONDON)
By Stephen Culp
NEW YORK, Sept 1 (Reuters) -
The S&P 500 advanced and benchmark Treasury yields rebounded after the much-anticipated U.S. August employment report showed an uptick in unemployment and cooler-than-expected wage growth, cementing expectations that the Federal Reserve will let key interest rates stand at its September policy meeting.
The three major indexes oscillated in morning trading, with the Dow joining the S&P 500 in the green, but the Nasdaq last essentially flat as investors digested the data ahead of the long U.S. holiday weekend.
All three indexes appeared set to notch gains on the week, and the S&P 500 and the Nasdaq were on track for their largest weekly percentage gains since March.
The Labor Department's payrolls report showed the U.S. economy added more jobs than expected last month, but the rising unemployment and participation rates, along with a welcome cool-down in average hourly wage growth, solidified expectations that the Fed will leave key interest rates stand this month.
Financial markets are pricing in a 93% likelihood of such a pause this month, according to CME's FedWatch tool.
But what the Fed will do beyond September remains an open question.
"The markets are reacting positively to that jobs number," said Alex McGrath, CIO for NorthEnd Private Wealth in Greenville South Carolina. "Is it going to move the Fed one way or the other? We don’t believe it will."
"We believe we’re going to get a further (interest rate) increase this year because of what we’ve been seeing in the commodity space," McGrath added. "This rise in commodity prices indicates inflation will continue to be sticky, which to us, warrants a further increase down the road."
The Dow Jones Industrial Average rose 146.38 points, or 0.42%, to 34,868.29, the S&P 500 gained 12.65 points, or 0.28%, to 4,520.31 and the Nasdaq Composite added 0.32 points, or 0%, to 14,035.29.
European stocks were essentially unchanged strength in the energy and mining sectors helped counter downbeat manufacturing data from France and Germany.
The pan-European STOXX 600 index rose 0.16% and MSCI's gauge of stocks across the globe gained 0.25%.
Emerging market stocks rose 0.54%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.3% higher, while Japan's Nikkei rose 0.28%.
U.S. 10-year Treasury yields rose but were last holding steady at the shorter end of the curve after the August employment report.
Benchmark 10-year notes last fell 23/32 in price to yield 4.1788%, from 4.091% late on Thursday.
The 30-year bond last fell 48/32 in price to yield 4.2945%, from 4.204% late on Thursday.
The greenback gained ground against a basket of world currencies in the wake of the payrolls data, but was on track to be essentially unchanged on the week.
The dollar index rose 0.35%, with the euro down 0.29% to $1.081.
The Japanese yen weakened 0.31% versus the greenback at 146.01 per dollar, while Sterling was last trading at $1.2615, down 0.46% on the day.
Oil prices jumped, driven by expectations of tightening supply.
U.S. crude rose 1.91% to $85.23 per barrel and Brent was last at $0.00, flat on the day.
Gold prices erased earlier gains, moving slightly lower in opposition to the dollar.
Spot gold dropped 0.1% to $1,938.53 an ounce.
(Reporting by Stephen Culp; Editing by Conor Humphries)
