By Amruta Khandekar and Shristi Achar A

Dec 7 (Reuters) – The Nasdaq led gains among Wall Street’s major indexes on Thursday, driven by a rise in Alphabet shares, while investors looked forward to monthly payrolls data for clues on the Federal Reserve’s policy actions.

The communication services sub-index.SPLRCLhousing Alphabet advanced 2.8%, leading gains among the 11 major S&P 500 sectors. Other megacap stocks, including Amazon.com AMZN.O and Apple AAPL.O, rose between 1.3% and 1.5% in early trading.

The tech-heavy Nasdaq .IXIC has outperformed peers this year, surging 36% on a rally in megacap stocks that has been powered by enthusiasm around the potential for artificial intelligence. Growing hopes of a cut in interest rates next year have also improved sentiment.

Reports showing weak private payrolls and job openings this week have reinforced expectations the Federal Reserve’s furious pace of rate hikes is slowing the economy, potentially allowing the central bank to ease up on its monetary policy next year.

Traders have almost fully priced in the likelihood of the Fed keeping interest rates unchanged at its meeting next week and have nearly 64% odds for a rate cut as soon as March 2024, according to the CME Group’s FedWatch tool.

However, some analysts have warned that markets have been too optimistic about rate cuts and also said the upcoming jobs report will be crucial in determining the chances of a soft landing – where the Fed manages to avert a recession.

“They (the Fed) certainly don’t have any cuts coming soon, but are data dependent,” said Joe Saluzzi, co-manager of trading at Themis Trading. “So if data is in line, that basically keeps the Fed on the current path.”

The Labor Department’s report, due on Friday, is expected to show that non-farm payrolls increased by 180,000 jobs last month after rising by 150,000 in October.

A separate reading showed initial jobless claims stood at 220,000 for the week ended Dec. 2, lower than estimates of 222,000, according to economists polled by Reuters.

Meanwhile, comments from Bank of Japan Governor Kazuo Ueda added to growing speculation that the central bank could soon shift away from its ultra-easy monetary policy.

At 9:36 a.m. ET, the Dow Jones Industrial Average .DJI was up 30.41 points, or 0.08%, at 36,084.84, the S&P 500 .SPX was up 23.18 points, or 0.51%, at 4,572.52, and the Nasdaq Composite .IXIC was up 128.69 points, or 0.91%, at 14,275.40.

Among other major movers, Advanced Micro DevicesAMD.Orose 4.6%, a day after the chipmaker estimated there was a $45 billion market for its data center artificial intelligence processors this year.

GameStopGME.N slid 3.2% after the videogame retailer missed estimates for quarterly revenue, hurt by rising competition.

Dollar GeneralDG.Nrose 2.4% as the retailer’s quarterly results beat estimates.

Advancing issues outnumbered decliners by a 1.49-to-1 ratio on the NYSE and by a 1.21-to-1 ratio on the Nasdaq.

The S&P index recorded 8 new 52-week highs and no new lows, while the Nasdaq recorded 25 new highs and 32 new lows.

(Reporting by Amruta Khandekar and Shristi Achar A; Editing by Saumyadeb Chakrabarty and Anil D’Silva)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Original: AMZN Feed: US STOCKS-Wall St rises on Alphabet boost, payrolls data in focus