The three major indexes of the New York stock market started strong. Although the August non-farm employment data proved the frozen job market, investors are weighing expectations that the pace of interest rate cuts will accelerate.
As of 9:45 a.m. local time on the 8th, the Dow Jones Industrial Average was up 89.16 points (0.20%) at 40,710.45 on the New York Stock Exchange.
The Standard & Poor's (S&P) 500 index rose 24.80 points (0.38%) to 6,526.88, while the Nasdaq Composite Index showed an increase of 121.50 points (0.56%) to 21,829.19. All three indexes hit intraday record highs.
According to the U.S. Department of Labor, the new employment in the non-farm institutional sector increased by only 22,000 in August, a significant drop from July's 79,000. It also fell short of the market expectation of 75,000. The employment figures for the previous two months were also revised downward, highlighting a clear slowdown in jobs. The new job count for June was revised down from an increase of 14,000 to a decline of 13,000, bringing it to 27,000. The unemployment rate recorded 4.3% in August, up 0.1 percentage points from the previous month.
Despite the employment slowdown, the stock market is reacting more strongly to the possibility of an interest rate cut by the Federal Reserve. According to the Chicago Mercantile Exchange (CME) FedWatch, there is an 88% probability that the Federal Open Market Committee (FOMC) in September will cut the benchmark interest rate by 25 basis points, while the probability of a 50 basis point cut is reflected at 12%. There is also a possibility of cutting by more than 50 basis points until October, exceeding 70%.
Saira Malik, head of equities and fixed income, said, "This employment report has signaled a green light for a 25 basis point rate cut, and the possibility of a 50 basis point cut (big cut) has increased, making the market positive."
By sector, consumer discretionary, consumer staples, materials, real estate, and telecommunications services are up, while energy and financials are down more than 1%.
Large-cap technology stocks with a market capitalization of over $1 trillion showed mixed results. Nvidia fell nearly 4%, while Tesla rose more than 4% on news that its board proposed a compensation package worth $1 trillion to founder Elon Musk. Broadcom increased by over 11% on strong Q2 performance and surging AI sales. In contrast, U.S. sportswear company Lululemon tumbled 16% as its earnings outlook fell short of expectations.
Major European indices are slightly rising amidst stagnation. The Euro Stoxx 50 index rose by 0.10%, while the German DAX index and French CAC 40 index increased by 0.05% and 0.03%, respectively. The UK FTSE 100 index also rose by 0.31%.
International oil prices continued to decline, falling over 2%. The nearby contract for West Texas Intermediate (WTI) crude oil was trading at $62.00 per barrel, a decrease of 2.35% from the previous session.