US Stocks Climb as Weak Jobs Data Fuels Fed Rate Cut Bets
Markets are pricing in a near-100% probability of a September rate cut after a surprisingly soft August labor report.
Wall Street started the week on a strong footing, with major indices like the S&P 500 and Nasdaq Composite advancing as investors grew more confident that the Federal Reserve will cut interest rates later this month. This optimism stems directly from a weaker-than-expected jobs report for August, which has intensified bets on a monetary policy shift.
The U.S. economy added significantly fewer jobs than anticipated last month, a key indicator of a cooling labor market. This development has led to a classic 'bad news is good news' scenario for equity investors, who now see a clear path for the central bank to intervene. , with the S&P 500 gaining 0.4% and the tech-heavy Nasdaq Composite rising 0.8% in early trading as rate cut expectations solidified.
The market reaction has been swift, with the probability of a September rate reduction now fully priced in by investors. This sentiment shift underscores the market's current focus on monetary policy as the primary driver of short-term performance. Following the labor data, , signaling strong conviction that the Fed will act to support the economy.
All eyes will now be on the Federal Reserve's upcoming meeting on September 17, where officials will weigh the recent slowdown in the labor market against ongoing inflation data. The central bank's decision will be a critical catalyst for the market's direction through the end of the year, as detailed in many .