Fed Rate Cut Bets Fuel Rally
US stock indexes advanced on Thursday with the S&P 500 up 0.84%, the Dow Jones adding 0.77%, and the Nasdaq 100 climbing 0.93%. Bond yields dropped after weaker labor market data reinforced expectations that the Federal Reserve will begin cutting rates at its September 16–17 meeting. The 10-year Treasury yield fell to a four-month low, with futures markets pricing in a 97% probability of a 25-basis-point cut.
Economic Data Signals Mixed Trends
The August ADP employment report showed payrolls rising by just 54,000 versus 68,000 expected. Initial jobless claims rose to 237,000, the highest in 10 weeks. However, the ISM services index jumped to 52.0, the strongest level in six months, pointing to resilience in the services sector. Productivity data for Q2 was revised higher to 3.3%, while unit labor costs came in weaker than forecasts, easing inflationary pressure.
Corporate Movers
The “Magnificent Seven” tech giants all closed higher. Amazon surged 4.3% after reports it is testing an AI-powered workspace tool called Quick Suite. Tesla and Meta gained more than 1%.
Homebuilders also benefited from lower bond yields, with PulteGroup and Toll Brothers up over 3%, while Lennar and DR Horton gained more than 2%.
Earnings and corporate updates drove sharp moves: American Eagle Outfitters soared 38% on strong results, Ciena jumped 23% after beating profit estimates, and Credo Technology advanced 7%.
On the downside, Salesforce dropped nearly 5% after issuing a weak Q3 revenue forecast, while Texas Instruments slid 4.5% on concerns about chip demand recovery. Health insurers including Elevance Health and Centene fell more than 4% after signaling weaker Medicaid margins.
Global Markets and Bonds
In Europe, the Euro Stoxx 50 added 0.41%. Japan’s Nikkei 225 rose 1.53%, but China’s Shanghai Composite fell 1.25%. Bond yields declined globally, with the German 10-year bund yield down to 2.719% and the UK gilt yield to 4.720%.
Outlook
Attention now turns to Friday’s US nonfarm payrolls report, with markets expecting a 75,000 gain in jobs, unemployment edging up to 4.3%, and wages rising 0.3% month-over-month. These figures could be pivotal in cementing the Fed’s decision to cut rates in September and may set the tone for markets heading into Q4.
Subscribe to stay up to date with the latest events in the financial markets.
Telegram: @bigstakeinvest
Twitter: @BigStakeTrades
Telegram: @bigstakeinvest
Twitter: @BigStakeTrades