US Stocks Rebound: Dow Jumps 350 Points, Nasdaq Extends Gains Amid Cooling Job Market Data
new York – US stocks experienced a broad rally on Thursday, with the Dow jones Industrial Average rebounding 350 points and the Nasdaq Composite securing its second consecutive daily gain. The positive movement followed the release of weaker-than-expected employment data, fueling expectations of potential interest rate cuts by the Federal Reserve.
The Dow closed higher, while the Nasdaq rose, bolstered by strong earnings from chipmaker Broadcom. Broadcom’s revenue increased 22% year-over-year to $15.96 billion, with AI revenue up 63% year-over-year. Adjusted earnings per share came in at $1.69, exceeding market expectations of $1.66. The company anticipates fourth-quarter revenue will also surpass forecasts, contributing to a 4% increase in its stock price during extended trading.
Conversely, Lululemon shares plummeted 15% after the market close, as the company’s annual revenue outlook fell short of projections. The company also reported a 1.1 percentage point decline in gross profit margin and weaker-than-anticipated same-store sales growth.
The ADP employment report indicated that US private sector added 54,000 jobs in August, considerably below the expected 75,000. Initial jobless claims for the week ending August 30 rose by 8,000 to 237,000, also exceeding the anticipated 230,000. These figures suggest a cooling labor market.
In response, market expectations for a 0.25% rate cut in September have risen to nearly 100%, with expectations for a similar cut in October climbing to 55%, according to the CME Exchange’s Fed monitoring tool.
Federal Reserve officials have signaled a willingness to consider looser monetary policy. New York Fed President and Vice Chairman of the Federal Reserve’s interest rate committee, John Williams, stated that a gradual adjustment of interest rates to a more neutral level is appropriate as the economy and job market slow.
However, Williams cautioned that the Fed faces a “subtle balance,” needing to prevent tariffs from creating lasting inflationary pressures while also avoiding overly restrictive monetary policy that could harm employment.
Despite the softening job market indicators, US service sector activity expanded at its fastest pace in six months in August, with order growth reaching its highest level in nearly a year. The ISM reported a service industry index increase of 1.9 points to 52, surpassing most economists’ forecasts.