Last week, the Nasdaq Composite and S&P 500 reached all-time highs. This was due to unusually disappointing employment market data, which heightened expectations that the Federal Reserve will lower interest rates later this year. This increase indicates that investors are getting more convinced that the central bank’s run of interest rate hikes may be coming to an end.
Jobs Report Moves the Market
According to the Labor Department’s June jobs report, the United States economy added 206,000 jobs, slightly more than expected. However, adjustments to previous months’ data reduced 111,000 jobs from the original predictions. The increase in the unemployment rate to 4.1 percent, the highest level since late 2021, along with evidence of slowing wage growth, was more telling. These signals indicated that the job market was gradually deteriorating, which investors saw as a hint that inflation was decreasing.
Tech stocks are in the lead
As expectations for rate reduction grew, technology companies, particularly mega caps, became the primary driver of gains. The Nasdaq Composite increased by more than 3% last week, due in part to Nvidia and Apple, two companies that have been critical to this year’s growth in artificial intelligence. The S&P 500 also reached new highs, adding to its already impressive performance this year.
Investors are now focused on impending inflation figures and comments from Fed Chair Jerome Powell. CME FedWatch Tool data reveal that the market is currently pricing in a probable rate cut in September.
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