Markets rebound in hopes of Fed action.

(AP) — The

Washington U.S. job market is flagging, and consumer prices are barely rising.

The picture sketched by data released Thursday has made some economists predict the Federal Reserve will announce some new step next week to boost the economy.

Applications for unemployment benefits rose last week, pointing to a fourth straight month of sluggish hiring in June. And consumer prices were pulled down in May by a plunge in gas prices.

Weak job growth raises pressure on the Fed because part of its mission is to boost employment. And mild inflation gives policymakers more leeway to act. If inflation were threatening to accelerate, Fed policymakers might feel compelled to raise interest rates.

Fed officials are “likely to go into that meeting feeling a little chastened and looking for a way to support the economy,” said Jeremy Lawson, an economist at BNP Paribas.

Expectations that the Fed will take some action sent stocks soaring Thursday. And stocks surged higher in the final hour of trading after a report said major central banks were prepared to pump money into global financial markets if necessary.

The Fed’s policymaking committee meets on June 1920. Economists say the Fed is likely to extend a current program during the meeting that swaps short-term Treasury securities for bonds with longer maturities.