U.S. stocks surged to new highs on Friday boosted by a positive jobs report that raised hopes for potential interest rate cuts. The S&P 500 hit a record high for the third consecutive day, rising by 0.5%. This marks the 34th record set by the index, which has climbed nearly 17% so far this year. The Dow Jones Industrial Average also increased by 0.2%, while the Nasdaq composite set a record with a 0.9% gain.
The bond market saw a significant reaction, with Treasury yields dropping after the jobs report indicated more hiring than expected, yet at a slower pace compared to the previous month. These findings, along with the unexpected rise in the unemployment rate and slower wage growth, strengthened the belief that the U.S. economy is slowing under the pressure of high interest rates.
Investors on Wall Street anticipate the Federal Reserve cutting its main interest rate, which is currently at its highest level in two decades, to counter the economic slowdown. The job market data supports expectations for interest rate cuts, possibly in September and again in December. The bond market also reacted, with the two-year Treasury yield falling to 4.60% and the 10-year Treasury yield dropping to 4.27%.
Amid concerns of a recession, the jobs report confirms expectations of future rate cuts by the Fed to sustain economic growth without reigniting inflation. The U.S. stock market saw mixed performances from companies, with Newmont, a gold miner, benefiting from a rise in gold prices, while tech giants like Meta Platforms and Apple contributed to market gains.
On the other hand, companies associated with cryptocurrency activities experienced losses as bitcoin’s value dropped below $54,000. Notable declines were seen in Coinbase Global and Robinhood Markets. The S&P 500 closed at 5,567.19, the Dow Jones Industrial Average at 39,375.87, and the Nasdaq composite at 18,352.76.
On the global market front, London’s FTSE 100 declined by 0.5% after the recent U.K. national election that signaled a shift from Conservative rule. The U.K. has faced economic challenges in recent years due to Brexit, the COVID-19 pandemic, and other external factors, leading to concerns among voters.
In Asia, Japan’s Nikkei 225 briefly surpassed the 41,000 level but ended the day slightly lower after setting a record closing level on Thursday. The movement in stock markets abroad reflects the impact of domestic and international events on investor sentiment.
