In a shortened trading session ahead of the Independence Day holiday, both the S&P 500 and Nasdaq set fresh records fueled by investor optimism for a potential rate cut in September. The S&P 500 (^GSPC) climbed 0.5% to a new peak of 5,537, building on its first-ever close above 5,500 the previous day. Similarly, the Nasdaq Composite (^IXIC) rose by approximately 0.9%, while the Dow Jones Industrial Average (^DJI) experienced a slight dip of 0.1%.
Investor sentiment was bolstered by disappointing economic data released Wednesday, which reinforced expectations of forthcoming monetary easing. Reports indicated a contraction in the US services sector at its fastest rate in four years, alongside a third consecutive monthly slowdown in private-sector job creation, with only 150,000 new jobs added in June — below market expectations.
Market participants are now pricing in a 74% likelihood of an interest rate cut in September, according to CME‘s FedWatch tool. Concurrently, yields on 10-year Treasury notes (^TNX) declined by approximately 8 basis points, settling near 4.35%.
The upcoming release of the June jobs report on Friday will be closely watched for further insights into the labor market’s trajectory amid broader economic indicators suggesting a potential slowdown.
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