Stock markets conclude with gains, as economic data maintains expectations for interest rate reduction
In a mixed bag of economic indicators, the U.S. stock market ended higher on Thursday, with the S&P 500 and Nasdaq Composite recording gains. The Dow Jones Industrial Average also saw a rise, despite September traditionally being a weak month for stocks, with the S&P 500 losing 1.5% on average since 2000.
The Dow Jones Industrial Average rose 348.71 points, or 0.77%, to 45,619.94. The S&P 500 gained 53.48 points, or 0.82%, to end at 6,501.21 points, while the Nasdaq Composite gained 207.26 points, or 0.96%, to 21,704.99.
Gains in shares of tech giants Amazon.com and Meta Platforms contributed to the market's performance. However, shares of Salesforce fell after the company forecast third-quarter revenue below Wall Street estimates. On a positive note, shares of Broadcom, a major artificial intelligence player, closed higher ahead of its quarterly results.
The labor market conditions are showing signs of softening, with hiring by private employers slowing in August. This trend was further underscored by the number of Americans filing new applications for unemployment benefits increasing more than expected last week. Despite this, the upcoming U.S. monthly jobs report is not expected to significantly change the expectation for an interest rate cut, according to Mike Dickson, head of research and quantitative strategies at Horizon Investments.
In line with this expectation, investors are pricing in a 95% probability of a 25 basis-point cut. Jerome Powell, the Fed Chair, has already signaled that a rate cut is likely unless the jobs report is "really, really out of bounds."
In a separate development, the German federal government announced a tax-saving measure for social security contributions on Wednesday. This move could potentially boost the German economy, although its direct impact on the U.S. stock market remains to be seen.
The U.S. monthly jobs report is awaited on Friday, which could provide further clarity on the direction of the U.S. economy and the Federal Reserve's monetary policy decisions.
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