(Bloomberg) — Wall Street traders kept piling into bets the Federal Reserve will cut rates in September as weak labor data drove bond yields down. Those wagers also fueled a bounce in stocks, which was led by a rally in the world’s largest tech companies.
Just days ahead of the US payrolls report, a drop in job openings to the lowest in 10 months fueled speculation on at least two Fed reductions in 2025. Treasuries rose across the curve following a slide that put the 30-year yield close to 5%. The S&P 500 gained amid a court victory for Big Tech that saw Alphabet Inc.’s Google dodging a sale of its Chrome web browser.
US REACT: July JOLTS Suggests Labor Demand Fading Quickly
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The slide in vacancies indicates companies are becoming more cautious and selective with their hiring as they attempt to gauge the impact of tariffs on the economy. In addition to the openings data, the pace of hiring has slowed and it is taking longer for unemployed people to find another position.
“This data point does confirm the slowing pace of hirings being seen in a variety of stats in the aggregate, but something we’re well aware of — and why the Fed is cutting rates by 25 basis points in two weeks,” said Peter Boockvar at The Boock Report.
Before that, Friday’s jobs data will be a crucial input for Fed officials. Some are less concerned about the slowdown in payrolls growth because it’s being accompanied by a decline in the participation rate. They’re also wary of reducing borrowing costs when inflation is gradually increasing.
Others, like Governor Christopher Waller say the US central bank should begin lowering rates this month and make multiple cuts in the coming months, adding that officials could debate the precise pace of reductions. He spoke on CNBC.
The JOLTS report may not be flashing alarm bells, but it’s the latest data point that reiterates a soft jobs market in the US, noted Bret Kenwell at eToro. When combined with the recent multi-year high in continuing jobless claims and the sharp downward revisions to job gains in recent months — both of which will be updated later this week — it underscores the softening we have seen.
While the US economy may have the cushion to absorb a softer jobs market, investors want to be careful not to see it develop into a weak labor market, he said.
“In the short term, today’s report is the latest data point that helps tip the Fed’s scale toward a rate cut, which we’re now likely to see later this month,” noted Kenwell. “But in the long-term, investors should not cheer for notable labor market weakness for the sole benefit of lower rates.”
Stocks bounced after having started September on a sour note amid lofty technology valuations and concerns about global fiscal budgets
“If anything, add on weakness,” said Steve Chiavarone at Federated Hermes. “If you cut away the noise and volatility, I’m not going to bet against the US market in an environment where earnings are growing, estimates are accelerating, economic data is good and rates are going to come down.”
HSBC strategists increased their year-end target for the S&P 500 for the second time in a month, citing a boost from better-than-expected quarterly earnings.
Strategist Nicole Inui now expects the benchmark to end the year at 6,500 points.
Corporate Highlights:
Alphabet Inc.’s Google avoided a breakup after a US judge ruled against the government’s most onerous proposals, including a forced sale of its Chrome browser. While it’s barred from exclusivity deals, Google will still be allowed to pay its partners — a key win for Apple Inc., which has received roughly $20 billion a year for making Google search the default on iPhones. After months of pain, Salesforce Inc. investors will be scrutinizing the software maker’s upcoming earnings for signs it will be a winner in the artificial intelligence boom — or one of its most high-profile victims. ServiceNow Inc. is offering federal agencies discounts of as much as 70% on its software, a move aimed at spurring adoption as the Trump administration presses for faster government implementation of artificial intelligence tools. Macy’s Inc. raised its annual outlook and reported its best comparable sales growth in three years, the latest signs that consumers are still spending despite concerns about inflation and tariffs Dollar Tree Inc. said that profit for the current quarter would be little changed, which overshadowed the discount chain boosting its annual outlook. Campbell’s Co.’s earnings beat estimates as Milano cookies helped its snacks business outperform. Michael Novogratz’s Galaxy Digital Inc. is offering a version of its Nasdaq-listed shares that can be traded on the Solana blockchain, aiming to spur similar tokenization efforts. Some of the main moves in markets:
Stocks
The S&P 500 rose 0.5% as of 11:13 a.m. New York time The Nasdaq 100 rose 1% The Dow Jones Industrial Average fell 0.2% The Stoxx Europe 600 rose 0.7% The MSCI World Index rose 0.4% Bloomberg Magnificent 7 Total Return Index rose 2.5% The Russell 2000 Index was little changed Alphabet rose 8.9% Apple rose 2.9% Macy’s rose 19% Currencies
The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.3% to $1.1678 The British pound rose 0.4% to $1.3442 The Japanese yen rose 0.2% to 148.05 per dollar Cryptocurrencies
Bitcoin rose 0.8% to $112,301.79 Ether rose 3.7% to $4,471.65 Bonds
The yield on 10-year Treasuries declined four basis points to 4.22% Germany’s 10-year yield declined four basis points to 2.74% Britain’s 10-year yield declined five basis points to 4.75% The yield on 2-year Treasuries declined three basis points to 3.61% The yield on 30-year Treasuries declined five basis points to 4.91% Commodities
West Texas Intermediate crude fell 2.5% to $63.98 a barrel Spot gold rose 0.9% to $3,563.64 an ounce ©2025 Bloomberg L.P.