Highlights
Stocks perked up Thursday as weak employment data added to expectations of a September rate cut with the S&P 500 setting a new record closing high.. The Dow Jones industrial average and the S&P both rose 0.8 percent and the Nasdaq was up 1.0 percent. US Treasury yields and oil prices declined while the dollar rose.
News that ADP employment rose by 54,000 in August, below expectations for an increase of 68,000, plus more comments from a batch of Federal Reserve officials stressing their concern over the slowing job market, add up to near certainty that the Fed will cut rates by 25 basis points in mid-September with more rate cuts to follow by year end. On the other hand, US services purchasing managers report topped expectations and indicated the huge services sector continued to expand, which suggested no dire collapse in economic activity yet.
Investors remain troubled by the Trump administration's efforts to take control of interest rates, with news Thursday that the Department of Justice has opened a criminal investigation of Fed Governor Lisa Cook. Meanwhile, Trump's nominee to fill a temporary opening on the Fed board, Stephen Miran pledged that he supports an independent Fed even as markets expect him to do the president's bidding.
Among sectors, Amazon led megacaps higher and lifted consumer discretionary. Other big winners included travel & leisure, credit cards, banks, homebuilders, building products and retail. Lagging were discount stores, airlines, food & beverage, managed care, software, utilities and biotech.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.