Indexes rebound sharply as investors bet on Fed easing
U.S. stocks rallied on Monday, recovering from last week’s losses as traders grew increasingly confident that the Federal Reserve will cut interest rates in response to weakening labor market data. The Dow Jones rose 1.06%, the S&P 500 gained 1.20%, and the Nasdaq surged 1.58%, setting up the S&P and Nasdaq for their strongest one-day performance in over two months.
The rebound followed a dismal jobs report released Friday that not only missed expectations but included steep downward revisions for previous months. The numbers pointed to a labor market losing momentum, which fueled speculation that the Fed may intervene with at least two rate cuts before the year ends.
Fed reshuffle and political pressure deepen rate cut outlook
Amid economic concerns, President Donald Trump added to the uncertainty by firing Bureau of Labor Statistics Commissioner Erika McEntarfer, accusing her of manipulating employment data. The same day, Fed Governor Adriana Kugler unexpectedly resigned, giving Trump an opportunity to reshape central bank leadership.
Market odds for a rate cut at the Fed’s September meeting jumped to 84%, according to CME FedWatch. Allianz strategist Charlie Ripley emphasized that markets will remain volatile due to the Fed’s reactive nature, especially with political pressure mounting on Chair Jerome Powell, who has faced repeated threats of dismissal from Trump over rate policy.
Corporate moves and international tensions add to market momentum
Tesla gained 1.2% after awarding CEO Elon Musk a 96-million-share package valued at $29 billion. In broader corporate news, all S&P 500 sectors posted gains, with communication services leading the charge, up 2%.
Among standout performers, Joby Aviation jumped 20.7% on reports it is exploring a purchase of Blade Air Mobility, whose shares rose 26.6%. IDEXX Laboratories surged nearly 27% after strong earnings and upgraded forecasts. Spotify climbed 6.8% following an announcement to raise subscription prices in select markets starting September.
Palantir, Disney, and Eli Lilly are among the major companies scheduled to report earnings later this week, potentially adding further movement to markets already primed by macroeconomic shifts.
Trade risks resurface as Trump threatens new tariffs
Geopolitical tensions remain in focus as Trump warned of steep new tariffs on India in response to its continued oil dealings with Russia. This comes shortly after imposing a 25% tariff on Indian imports, reigniting concerns about trade wars and their impact on global supply chains and inflation.
Meanwhile, U.S. factory orders declined 4.8% in June after a strong May, driven mainly by a drop in aircraft demand, further signaling a potential economic slowdown.
