Stock Market Today: Wall Street Hits New Records as Rate Cut Hopes Rise

NEW YORK — U.S. stocks hit new records Friday after a highly anticipated jobs report boosted Wall Street hopes that interest rates could ease soon.

The S&P 500 index climbed 0.5%, setting a new record for the third straight day after Thursday's break for the Fourth of July. The index has already set 34 records and is up nearly 17% this year, just over halfway.

The Dow Jones Industrial Average rose 67 points, or 0.2%, while the Nasdaq Composite added 0.9% to its own record high.

The action was more decisive in the bond market, where Treasury yields fell after the release of the U.S. jobs report. Employers hired more workers last month than economists expected, but the number of hires remained down from May. In addition, the unemployment rate rose unexpectedly, growth in worker wages slowed and the U.S. government said hiring in previous months was lower than it had previously reported.

Overall, the data reinforced Wall Street’s belief that growth in the U.S. economy is slowing under the weight of high interest rates. That’s exactly what investors want to see, because a slowdown would help contain inflation and could prompt the Federal Reserve to start cutting its key interest rate, which is at its highest level in two decades.

The question is whether the economy can stay in this sweet spot, neither too hot nor too cold, while the Federal Reserve carefully plans its next steps. The hope is that the Fed will cut interest rates early enough and by enough to keep the economic slowdown from sliding into a recession, but not so much that it allows inflation to pick up steam and start rising again.

The jobs report made clear that the Fed is on track to cut its key interest rate later this year, likely in September and perhaps again in December. The yield on two-year Treasury notes, which closely tracks expectations of Fed action, fell to 4.60% from 4.71% late Wednesday.

The yield on the 10-year Treasury note, the centerpiece of the bond market, fell to 4.27% from 4.36% late Wednesday and 4.70% in April. That's a notable development for the bond market and provides support for stock prices.

Friday’s jobs report follows a string of data showing a broad slowdown in the U.S. economy. Reports earlier this week showed that economic activity in the U.S. service and manufacturing sectors contracted last month, coming in weaker numbers than economists had expected. And U.S. consumers at the lower end of the income scale showed how hard it is to keep up with continued price increases as credit card balances balloon.

“What matters for long-term investors is whether recession fears come to fruition,” said Brian Jacobsen, chief economist at Annex Wealth Management. “We think it’s unlikely we’ll see a recession this year or next, but that doesn’t mean markets won’t fear one.”

On Wall Street, gold miner Newmont rose 2.4%, one of the biggest gains in the S&P 500. It benefited from the rise in the price of gold, which typically strengthens when interest rates fall. That’s the flip side of the coin when rates rise and bonds pay higher yields, which can turn investors away from gold because it doesn’t provide any returns to its holders.

Gains in some influential big names also helped support the market, even as the majority of S&P 500 stocks fell. Meta Platforms jumped 5.9% and Apple added 2.2%.

Amazon rose 1.2% after announcing a deal in which the parent company of Saks Fifth Avenue will buy Neiman Marcus Group for $2.65 billion. Amazon will hold a minority stake in the combined company.

Companies closely tied to the cryptocurrency business were the biggest losers on Wall Street, with bitcoin briefly falling below $54,000 from nearly $63,000 earlier in the week before recovering slightly. The cryptocurrency’s value has fallen back to roughly where it was in February.

Coinbase Global fell 0.6% and Robinhood Markets fell 1%.

Overall, the S&P 500 rose 30.17 points to 5,567.19. The Dow Jones Industrial Average gained 67.87 points to 39,375.87 and the Nasdaq Composite gained 164.46 points to 18,352.76.

In overseas stock markets, London's FTSE 100 fell 0.5% after British voters ushered in a new regime by ousting the Conservatives in this week's national election.

The United Kingdom has endured a turbulent run of years under Conservative rule, leaving many voters pessimistic about the future of their country. Britain’s exit from the European Union, followed by the COVID-19 pandemic and Russia’s invasion of Ukraine, have battered the economy. Rising poverty and cuts to public services have led to complaints of a “broken Britain.”

In Asia, Japan's Nikkei 225 index rose above 41,000 points on Friday morning, surpassing its record closing level set on Thursday, but ended the day slightly lower.