U.S. stocks rallied Monday as weak jobs data bolstered expectations that the Federal Reserve could begin cutting interest rates in the coming months.
The Dow Jones Industrial Average climbed 1.3 percent, the S&P 500 rose 1.5 percent, and the tech-heavy Nasdaq jumped 2 percent—driven by investor optimism that slowing labor market momentum may prompt the Fed to ease borrowing costs sooner than expected.
Retail stocks led the advance, with shares of home furnishings and kitchenware firm Williams-Sonoma and Tapestry—parent company of Coach and Kate Spade—posting strong gains on hopes that lower interest rates could revive consumer spending.
The boost followed disappointing employment data released last Friday. According to the Bureau of Labor Statistics, nonfarm payrolls rose by just 73,000 in July, well below economists’ forecasts. The unemployment rate also edged higher, rising to 4.2 percent from 4.1 percent in June, with 7.2 million Americans officially unemployed.
Adding to concerns, job figures from the previous two months were dramatically revised downward. May’s payroll gain was slashed from 125,000 to 19,000, while June’s figure was cut from 147,000 to just 14,000. The combined downward revision of 258,000 jobs casts doubt on earlier signs of labor market strength.
While the data raised fresh concerns about the U.S. economy’s growth outlook, markets interpreted it as increasing the likelihood of a rate cut by the Fed—possibly as early as its next meeting. Investors are now watching for further signals from central bank officials and upcoming inflation data to assess the timing of any policy shift.
