Weak Jobs Drive Fed Bets, Lifting Stocks and Bonds – US Market Wrap
Wall Street traders continued to pile into bets that the Federal Reserve would cut interest rates in September, as weak labor data lifted bonds. These bets also bolstered stocks, halting a two-day slide amid a rally in big tech.
Just 48 hours before the all-important US payrolls report, a drop in job openings to the lowest level in ten months had traders almost fully pricing in a Fed cut this month and projecting at least two cuts in 2025. Treasuries rebounded following a decline that brought the 30-year yield close to 5%. The dollar fell.
Most S&P 500 stocks actually fell. Alphabet led Megacap gains as Google avoided a forced sale of Chrome. Apple plans to launch an AI-powered web search tool for Siri. Salesforce predicted slow sales growth late in the day.
The decline in vacancies indicates that businesses are becoming more cautious and selective in their hiring as they try to assess the impact of tariffs on the economy. In addition to the openings data, the hiring rate has slowed, and it is taking longer for unemployed people to find another job.
Fed officials will rely heavily on Friday’s jobs data. Some are less concerned about the slowdown in payroll growth because it is accompanied by a drop in participation rates. They are also wary of lowering borrowing costs as inflation gradually rises.
