NEW YORK (AP) — U.S. stocks are rising further into record heights on Friday after the latest disappointing signal on the job market bolstered expectations that the Federal Reserve will have to cut interest rates soon to help the economy.
The S&P 500 climbed 0.4% and added to its all-time high set the day before. The Dow Jones Industrial Average was up 115 points, or 0.3%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.6% higher.
The action was much stronger in the bond market, where Treasury yields tumbled after the report from the U.S. Labor Department said employers across the country hired far fewer workers in August than economists expected. The U.S. government also said that earlier estimates for June and July overstated hiring by 21,000 jobs.
The disappointing numbers followed last month’s weaker-than-expected update, along with other lackluster reports in the intervening weeks, and traders now are betting on a 100% probability that the Fed will cut its main interest rate at its next meeting on Sept. 17, according to data from CME Group. Such cuts can give a kickstart to the economy and job market, but the Fed has held off on them so far this year because they can also give inflation more fuel.
Until now, the Fed has been more worried about the potential of inflation worsening because of President Donald Trump’s tariffs than about the job market. But Friday’s job numbers were weak enough that they could even push the Fed to consider cutting by a deeper-than-usual half of a percentage point in two weeks, said Brian Jacobsen, chief economist at Annex Wealth Management.
“This week has been a story of a slowing labor market, and today’s data was the exclamation point,” according to Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.
While the data on the job market is disappointing, it’s still not so weak that it’s screaming a recession is here. The hope for investors is that the job market can remain in a balanced state where it’s not so strong that it prevents cuts to interest rates but also not so weak that profits for companies disappear.
On Wall Street, Broadcom leaped 13.8% and helped pull tech stocks higher after it reported better profit and revenue for the latest quarter than analysts expected. CEO Hock Tan said customers are continuing to invest strongly in chips used for artificial-intelligence technology, and the company expects revenue from them to accelerate to $5.2 billion in the current quarter.
Tesla rose 3.1% after proposing a payout package that could reach $1 trillion for CEO Elon Musk if the electric vehicle company meets a series of extremely aggressive targets over the next 10 years.
Those gains helped offset a 16.4% drop for Lululemon. The yoga and athletic gear maker tumbled after it fell short of analysts’ expectations for revenue in the latest quarter, even though its profit topped forecasts. CEO Calvin McDonald pointed to disappointing results from its U.S. operation, as its international results saw positive momentum. CFO Meghan Frank said Lululemon is facing “industry-wide challenges, including higher tariff rates.”
In stock markets abroad, indexes rose across much of Europe and Asia.
In Tokyo, the Nikkei 225 rallied 1% after data showed accelerating growth in earnings for Japanese workers in July.
Chinese markets rebounded after three days of decline. Indexes jumped 1.4% in Hong Kong and 1.2% in Shanghai.
In the bond market, the yield on the 10-year Treasury tumbled to 4.07% from 4.17% late Thursday and from 4.28% on Tuesday. That’s a notable move for the bond market.
The two-year Treasury yield, which more closely tracks expectations for Fed action, fell even more. It dropped to 3.47% from 3.59% late Thursday.
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AP Writers Matt Ott and Teresa Cerojano contributed.
Stan Choe, The Associated Press
