Labor data fails to shift Fed expectations
The S&P 500 closed at an all-time high Thursday, as softer labor market data reinforced investor expectations of a Federal Reserve interest rate cut. All eyes are now on Friday’s closely watched monthly jobs report.
Earlier Thursday, jobless claims rose more than anticipated, and hiring by private employers slowed in August, signaling a cooling labor market. These indicators have fueled further belief that the Fed is poised to reduce interest rates, especially after dovish comments by Chair Jerome Powell last week.
Tech and consumer stocks drive momentum
Leading the day’s gains were shares of Broadcom, Amazon, and Meta Platforms. Broadcom closed up 1.2% ahead of its earnings release and rose further in after-hours trading on strong quarterly results and AI-related demand. Amazon surged 4.3%, contributing to a 2.3% gain in the consumer discretionary sector. Meta Platforms also advanced 1.6%.
JetBlue Airways announced a new partnership with Amazon’s Project Kuiper to enhance in-flight Wi-Fi, adding further buzz to the sector. Meanwhile, American Eagle Outfitters shares soared 38% after the company raised its Q3 sales forecast.
In contrast, Salesforce shares fell 4.9% after its revenue forecast fell short, raising concerns about slow monetization of its AI offerings.
Markets price in near-certain rate cut
Investors are now pricing in a 95% probability of a 25 basis-point cut, according to CME’s FedWatch Tool. “Unless the payrolls data is wildly off, Powell has already telegraphed that a cut is coming,” said Mike Dickson, head of research at Horizon Investments.
The Dow Jones Industrial Average rose 350.06 points (0.77%) to 45,621.29, the S&P 500 gained 53.82 points (0.83%) to 6,502.08, and the Nasdaq climbed 209.97 points (0.98%) to 21,707.69.
Volume, market breadth, and seasonal context
Advancers outnumbered decliners by 2.79 to 1 on the NYSE, with 303 new highs versus 61 new lows. On Nasdaq, 2,741 stocks rose, while 1,878 fell — a ratio of 1.46 to 1.
Volume reached 14.68 billion shares on U.S. exchanges, below the 20-day average of 16.07 billion. This reflects strong demand for equities, especially in the tech and AI-driven sectors, despite caution over macro risks.
Historically, September is a weak month for equities, with the S&P 500 averaging a 1.5% decline since 2000, per LSEG data. While AI stocks have powered recent rallies, momentum slowed last month. Nvidia, for instance, dropped after trimming China sales from its forecast due to U.S.-China trade tensions.
