Stocks gain, US yields drop as markets weigh likely Fed rate cut

By Chibuike Oguh

NEW YORK, Dec 3 (Reuters) - Global shares rose while U.S. Treasury yields fell after weak economic data solidified expectations of a Federal Reserve interest rate cut.

Wall Street's main indexes finished higher, with energy, financials and industrials stocks topping gains while technology and utilities shares were the main drag.

The Dow Jones Industrial Average rose 0.86%, the S&P 500 edged up 0.30% and the Nasdaq Composite fell 0.17%.

The European STOXX 600 index rose 0.13%, with London's FTSE index finishing down 0.10% and Germany's DAX gained 0.59%. MSCI's gauge of stocks across the globe rose 0.40%.

"We are expecting to see a continued rebound because the companies that have been the leaders up until the summer seem to have paused and they're bouncing off support levels, and so it still looks very productive and positive for the rest of the year," said Tom Plumb, chief executive and portfolio manager at Plumb Funds in Madison, Wisconsin. 

Data showed that U.S. private employment decreased by 32,000 jobs last month compared to an estimate of growth of 10,000 jobs, according to economists polled by Reuters.

TREASURY YIELDS FALL

The yield on benchmark U.S. 10-year notes fell 2.9 basis points to 4.059%. The 2-year note yield, which typically moves in step with Fed expectations, fell 3 basis points to 3.489%.

Markets are pricing in an 89% probability of a 25-basis-point interest rate cut at the Fed's next meeting, according to the CME's FedWatch tool.

"The consensus is that the Fed is going to lower the interest rate next week and I don't see any reason to question that at this point," Plumb added.

President Donald Trump said he would announce his pick to succeed Jerome Powell as Fed chair early in 2026. White House economic adviser Kevin Hassett has emerged as the frontrunner.

In currency markets, the euro hit a six-week high against the dollar, boosted by data showing an expansion in euro-zone business activity. The single currency was last up 0.39% at $1.1668. 

The U.S. dollar index was headed for a ninth straight session of declines against major currencies, weighed down by rate cut expectations. The index fell 0.42% to 98.89.

Against the Japanese yen, the dollar weakened 0.4% to 155.23.

Oil prices rose as markets weighed faltering Russia-Ukraine peace hopes. An end to the war would probably lead to sanctions changes and ultimately more Russian oil in global markets.

Brent crude futures rose 0.35% to settle at $62.67 a barrel, with U.S. crude rising 0.53% to $58.95 per barrel. [O/R] 

Spot gold was flat at $4,207.59 an ounce.

Bitcoin, which has crashed by almost a third since early October, gained 1.75% to $93,225.56.

(Reporting by Chibuike Oguh in New York; Additional reporting by Rae Wee in Singapore and Polina Devitt in London, editing by Alex Richardson, Mark Heinrich, Rod Nickel)