The S&P 500 closed higher on Wednesday, driven by increasing expectations for a Federal Reserve rate cut in September, which overshadowed concerns about the economy following weaker labor market data.
By the close of trading at 16:00 ET (20:00 GMT), the Dow Jones Industrial Average rose by 55 points (0.1%), the S&P 500 climbed 0.4%, and the NASDAQ Composite advanced 0.6%.
Fed Hints Strongly at Potential September Rate Cut
The minutes from the Federal Reserve’s July meeting, released on Wednesday, provided the clearest indication yet that a rate cut could be on the horizon. A “vast majority” of Fed policymakers agreed that if the current progress on inflation continues, it may be appropriate to reduce rates at the next meeting.
Market sentiment aligns with this outlook, as approximately 63% of traders anticipate a rate cut next month, according to Investing.com’s Fed Rate Monitor Tool.
These minutes were released just days before Fed Chair Jerome Powell’s highly anticipated speech at the economic symposium in Jackson Hole on Friday, where further insights into the Fed’s policy direction may be revealed.
Revised Payroll Data Boosts Investor Confidence
Investors gained confidence on Wednesday after the Bureau of Labor Statistics reported that the U.S. economy added significantly fewer jobs than initially reported over the past year. The March 2024 employment gains were revised down by 818,000 positions as part of the agency’s annual benchmark review of payroll data.
As markets remain cautious, investors are closely watching for any further signals from the Fed regarding its intentions for the September policy meeting.
Goldman Sachs forecasted a downward revision of 600,000 to 1 million fewer jobs created from April 2023 to March 2024, though the firm noted that this revision might exaggerate the extent to which payroll growth has been overstated.
Stock Highlights: Target and Keysight Technologies Rise, Macy’s and La-Z-Boy Fall
Target Corporation (NYSE) saw its stock rise by 11% after the retailer raised its annual profit forecast and exceeded expectations for second-quarter comparable sales, driven by strong demand for low-priced groceries and essentials.
Conversely, Macy’s (NYSE) stock fell 13% after the department store chain missed market expectations for quarterly revenue, as ongoing weakness in U.S. consumer spending weighed on demand for non-essential, big-ticket items.
Keysight Technologies (NYSE) experienced a 13% surge in its stock price after reporting better-than-expected earnings and expressing optimism about a “gradual recovery” in 2025.
Furniture maker La-Z-Boy Incorporated (NYSE) saw its stock drop by 3%, as strong earnings were offset by a weaker-than-expected guidance.
JD.com Slips as Walmart Plans to Sell Stake; Ford Adjusts EV Strategy
Chinese e-commerce giant JD.com (NASDAQ) saw its stock decline by more than 4% following a Bloomberg report that Walmart (NYSE) plans to sell its stake in the company for approximately $3.7 billion.
Meanwhile, Ford Motor Company (NYSE) gained over 1% after announcing the cancellation of its planned three-row electric SUV and delaying the rollout of a new F-150, as the automaker adjusts to softer demand.
