Wall Street edged higher on Thursday, continuing its upward momentum as stronger-than-expected U.S. job data pushed the July rate cut further out of reach. The S&P 500 (INDEXSP:.INX) rose 0.3% and was on track to set another record high—its fourth in just five days. The Nasdaq Composite (INDEXNASDAQ:.IXIC) gained 0.5%, while the Dow Jones Industrial Average (INDEXDJX:.DJI) added 88 points.
While the gains in equities were notable, the real action was in the bond market. Treasury yields surged, reflecting investor expectations that the Federal Reserve will hold interest rates steady at its July meeting.
Strong Job Data Undermines July Rate Cut Odds
The Labor Department’s report, due later today, is expected to show that the U.S. economy added 117,500 jobs in June. Despite this being a modest slowdown in hiring, it’s still robust enough to signal resilience in the job market. The unemployment rate is forecast to tick up to 4.3%, which would mark the highest level since October 2021—but still well within the range of a healthy labor market.
These figures sharply contrast with recent hopes among investors for a July rate cut. With job growth holding steady and no dramatic signs of economic distress, the Fed is less likely to cut rates this month.
Traders have quickly recalibrated their expectations. Fed futures markets now show significantly reduced odds of a rate cut in July, shifting the focus to possible easing later in the year.
Trump’s Tariffs Add Complexity to Outlook
Economists also note the impact of former President Donald Trump’s policies, including ongoing tariff threats, a federal hiring freeze, and tightened immigration enforcement. These factors are starting to weigh on labor force dynamics, especially in export-heavy sectors.
Tariffs, which are set to expand next week unless new trade agreements are reached, raise production costs and invite retaliation from trade partners. The uncertainty has led some businesses to pause hiring decisions, potentially contributing to the modest increase in unemployment.
However, as long as wage growth and consumer spending remain stable, the Fed is expected to prioritize inflation control over aggressive rate cuts.
Global Markets Mixed Amid Fed Speculation
Global stock markets delivered a mixed performance as investors watched U.S. monetary policy signals closely. In Europe, Germany’s DAX and France’s CAC 40 each gained 0.1%, while the UK’s FTSE 100 rose 0.4%.
In Asia, Japan’s Nikkei 225 rose 0.1% to 39,785.90, while South Korea’s Kospi jumped 1.3%. Hong Kong’s Hang Seng Index declined 0.6%, and Australia’s S&P/ASX 200 fell 0.1%.
U.S. tech giants continued to benefit from bullish sentiment. Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) both traded near record highs, boosted by investor confidence that the Fed will avoid abrupt moves.
Treasury Yields Surge as Fed Holds Steady
The 10-year Treasury yield jumped to 4.34%, up sharply from the day before. Rising yields typically reflect diminished expectations for rate cuts and stronger confidence in economic resilience.
Although higher yields can pressure high-growth sectors like tech, Thursday’s gains suggest investors believe the Fed’s decision to delay a July rate cut won’t derail market momentum—at least for now.
Crude Oil and Currency Markets Stay Calm
On the commodities front, U.S. crude oil slipped 14 cents to $67.31 per barrel, while Brent crude fell 21 cents to $68.90. In currencies, the U.S. dollar strengthened slightly to 143.85 yen, and the euro edged up to $1.1793.
Conclusion: Markets Signal Confidence Without July Rate Cut
Thursday’s market performance underscores growing investor confidence in the U.S. economy’s ability to withstand higher interest rates—at least temporarily. While the chance of a July rate cut has dropped, solid job growth and strong corporate earnings continue to fuel stock market gains.
Investors will now shift their attention to future Fed meetings, corporate earnings season, and any further developments on the trade front that could change the outlook once again.
Featured Image – Freepik
