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Wall Street Rebounds on Fed Rate-Cut Bets Despite Data Dispute and Fed Shake-Up

Investor bets on a September Fed rate cut propelled major indexes higher despite political intervention in labor data reporting

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Unexpectedly weak jobs data has led to increasing investor optimism that the U.S. Federal Reserve will soon cut interest rates.
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Overview

  • July’s unexpectedly weak jobs report included downward revisions of nearly 260,000 positions for May and June, signaling a cooling labor market.
  • Major U.S. benchmarks rallied on August 4 with the Dow up about 1.2%, the S&P 500 up around 1.5% and the Nasdaq up roughly 2%, marking their strongest single-day gains since May.
  • CME FedWatch data showed about an 84% probability of a September Federal Reserve interest-rate cut, reflecting heightened expectations for policy easing.
  • President Trump dismissed BLS Commissioner Erika McEntarfer amid accusations of falsifying job figures and Fed Governor Adriana Kugler unexpectedly resigned, raising questions about institutional independence.
  • Second-quarter earnings drove outsized stock moves as IDEXX Laboratories surged over 26% on upgraded forecasts, On Semiconductor fell about 15% on weak sales, and Tesla edged higher following a 96-million-share award for CEO Elon Musk.