U.S. Stocks Climb on Hopes of Faster Fed Rate Cuts
U.S. equity indexes ended higher on Tuesday as expectations grew that the Federal Reserve may accelerate monetary easing. The S&P 500 gained +0.27%, the Dow Jones added +0.43%, and the Nasdaq 100 rose +0.33%. Futures on both the S&P and Nasdaq also advanced.
Labor market weakness fuels dovish bets
Investor sentiment improved after a benchmark revision showed U.S. payrolls were overstated by 911,000 jobs in the year through March — the sharpest markdown since 2000. This deep cut reinforced signs of a slowing labor market and boosted confidence in more aggressive Fed rate moves. Markets are fully pricing in a 25 bp cut at the Sept. 16–17 FOMC meeting, with a 10% chance of a larger 50 bp reduction. By year-end, traders expect a total of 72 bp in cuts, bringing the fed funds rate to 3.66%.
Inflation and tariffs in focus
This week’s key macro data include August PPI on Wednesday and CPI on Thursday, with consumer prices forecast to accelerate to +2.9% y/y. Meanwhile, trade tensions remain in the spotlight as tariff policies move closer to a potential Supreme Court review.
M&A momentum
Corporate dealmaking provided further support. Anglo American agreed to acquire Teck Resources in a $50+ billion deal, while Novartis will buy Tourmaline Bio for $1.4 billion. Shares of TRML surged over 57% on the news.
Market movers
UnitedHealth led the Dow with an +8% jump, while Centene and Molina gained strongly as Medicare ratings bolstered outlooks. Chipmakers added strength, with AMD, Micron, and Nvidia advancing. On the downside, Humana plunged -12% after warnings about tougher Medicare bonus thresholds, while lithium giant Albemarle fell -11% on news of resumed Chinese production.
Bonds and yields
The 10-year Treasury yield edged up to 4.07% amid heavy supply from U.S. auctions, though strong demand for the three-year note provided some support. European yields also ticked higher, while the ECB is not expected to cut rates at its upcoming meeting.
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