The S&P 500 and Nasdaq achieved record high closes on Wednesday, buoyed by data suggesting a slowing economy, raising hopes for a Federal Reserve interest rate cut in September. The Dow Jones Industrial Average, however, dipped slightly due to declines in healthcare and consumer stocks during a shortened trading session before the Fourth of July holiday.
ADP Employment and jobless claims data indicated a weakening labor market, bolstering expectations of a Fed rate cut. “It’s quite a strong unemployment claims number, fitting in with an overall trend of a loosening jobs market. It must be quite welcoming for the Fed,” noted David Morrison, Trade Nation senior market analyst.
Weaker-than-expected PMI data and a slump in factory orders further supported rate cut bets, with LSEG’s FedWatch showing over 70% anticipation for a September cut. Tesla surged 6.5%, nearing a six-month high, following better-than-expected vehicle delivery figures.