US Markets Hit Record Highs as Weak Jobs Data Fuels Fed Rate Cut Hopes
US stock indexes closed higher on Wednesday: the S&P 500 gained +0.34%, the Nasdaq 100 rose +0.49%, and the Dow Jones added +0.09%. The S&P 500 and Nasdaq 100 reached new all-time highs, while the Dow hit a one-week peak.
The main driver was weak labor market data: the ADP employment report showed a decline of 32,000 jobs in September, marking the second consecutive monthly drop and the sharpest fall in 2.5 years. This pushed the 10-year Treasury yield to a 1.5-week low and lifted the probability of a Fed rate cut at the October 28–29 meeting to 100%.
Additional Positive Factors
In addition to easing policy expectations, markets were supported by a rise in the ISM Manufacturing Index to a 7-month high. Chipmakers and pharmaceutical stocks also provided momentum, with the latter extending their rally after Pfizer’s deal with the US government granted the company a three-year reprieve from pharmaceutical tariffs.
Political Uncertainty Pressure
At the start of the session, indexes moved lower due to the ongoing government shutdown. The closure delayed the release of key macroeconomic reports, including weekly jobless claims and the monthly jobs report. A prolonged shutdown could also impact the release of inflation data. Meanwhile, the dollar fell to a one-week low, and gold surged to a record high as investors sought safe havens.
Corporate Sector: Leaders and Laggards
Pharmaceuticals posted strong gains: AstraZeneca (+9%), Eli Lilly (+8%), Merck (+7%), while Pfizer, Moderna, and Regeneron climbed more than +6%.
Semiconductors also rallied: Super Micro Computer (+9%), Micron (+8%), Intel (+7%), with Applied Materials and Lam Research gaining over +6%.
Other standouts included Lithium Americas (+23%) after the US government agreed to acquire a stake, AES Corp (+16%) amid talks with BlackRock, and Nike (+6%) following a stronger-than-expected earnings report.
On the downside, Corteva (-9%) slid after announcing plans to split its businesses, MercadoLibre (-8%) fell under pressure from Amazon Brazil’s fee cuts, while retailers Dollar Tree and Dollar General lost more than -3% after Amazon launched its private-label food line.
Macroeconomic Outlook
Investors are now focused on upcoming inflation and jobs data. If the government reopens, Thursday’s jobless claims are expected to rise to 225,000, and Friday’s nonfarm payrolls report is forecast to show +51,000 new jobs.
Subscribe to stay up to date with the latest events in the financial markets.
Telegram: @bigstakeinvest
Twitter: @BigStakeTrades
Telegram: @bigstakeinvest
Twitter: @BigStakeTrades