Wall Street Rallies as Weak Jobs Data Fuels Fed Rate Cut Bets
Cooling labor market signals increase investor expectations for a September interest rate reduction, boosting major indices despite tariff concerns.
Wall Street gained ground this week as signs of a cooling U.S. labor market bolstered expectations that the Federal Reserve will soon cut interest rates to support the economy. The S&P 500 rose 0.5% while the Nasdaq composite climbed 1%, driven by fresh data showing a slowdown in job openings.
Data released on Wednesday showed that U.S. employers were advertising , a figure lower than economists had forecast. This report has solidified the view on Wall Street that the job market is softening, increasing pressure on the Federal Reserve to implement its first interest rate cut of the year at its upcoming September meeting. Market observers are now pricing in a high probability of a quarter-point reduction.
This optimism, however, is tempered by significant global economic headwinds. The Trump administration's aggressive tariff policies have introduced a layer of volatility and fears of stagflation. According to one analysis, the U.S. effective tariff rate has surged, creating . This has forced investors into a delicate balancing act: positioning for potential Fed easing while hedging against tariff-driven volatility.
The dynamic has led to notable market movements. While rate-sensitive tech stocks like Alphabet and Apple have rallied, retailers have offered mixed results. Macy’s surged on strong earnings, while Dollar Tree fell despite a profit beat, citing the uncertain timing and impact of tariffs. Investors will now be closely watching for the full August nonfarm payrolls report for a clearer signal on the Fed’s next move.