Weak jobs data lift stocks as traders price in September rate cut

Weak U.S. jobs readings and a jump in unemployment claims this week pushed stocks higher and sent Treasury yields tumbling, sharpening market expectations that the Federal Reserve will cut its main interest rate at its September 16-17 meeting. Investors cited softer payroll gains, upward revisions to jobless claims and comments from policymakers as the catalyst for a rally in equities and a slide in bond yields on Friday and into the weekend.

The Labor Department reported weekly initial unemployment claims rose by 27,000 to 263,000, the highest level since October 2021, while other recent payroll data showed only modest job gains and large downward revisions to prior months. The weaker labor-market signals have increased the probability that the Fed will ease policy from the current 4.25 to 4.50 percent range, according to market-implied odds. Benchmark 10-year Treasury yields fell toward and briefly below 4 percent, and the S&P 500, Dow and Nasdaq all posted gains, with the S&P closing up roughly 0.4 percent. Broadcom’s stronger-than-expected quarterly report and upbeat guidance also helped lift equities, with its shares surging in premarket trading.