[New York Stock Market] Rises on Slowing Private Employment... Nasdaq Up 0.54%

Slowing Private Employment and Q2 Growth Downgrade
"Bad News is Good News"
Rising Expectations for Fed Tightening End

With indicators showing that the overheating in the U.S. private employment market is cooling down, the three major indices on the New York Stock Exchange all closed higher on the 30th (local time).

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On that day, the Dow Jones Industrial Average closed at 34,890.24, up 37.57 points (0.11%) from the previous session. The S&P 500, which focuses on large-cap stocks, rose 17.24 points (0.38%) to 4,514.87, and the tech-heavy Nasdaq index jumped 75.55 points (0.54%) to close at 14,019.31. This marked the fourth consecutive day of gains for all three major indices.

The S&P 500 surpassed the 4,500 mark, rising for the fourth straight day, buoyed by gains in the tech sector. Nvidia rose 0.98% after hitting an all-time high the previous day. Apple jumped 1.92% as it sent out invitations worldwide for a new product launch event expected on September 12, where the 'iPhone 15' is anticipated to be unveiled. In contrast, Hewlett-Packard (HP) fell 6.63% following its Q2 earnings report, with sales down 9.9% year-over-year due to weak demand for personal computers (PCs).

Following the Job Openings and Labor Turnover Survey (JOLTS) released by the U.S. Department of Labor the previous day, private employment data were released, signaling that the hot labor market is cooling down.

According to ADP, a U.S. private employment data provider, private sector employment in August increased by 177,000 jobs compared to the previous month. This is significantly lower than July's 371,000 and well below market expectations of 200,000. The U.S. second-quarter Gross Domestic Product (GDP) growth rate was also revised down from 2.4% to 2.1% (annualized quarter-over-quarter basis).

The stock market welcomed the cooling labor market and downward revision of growth rates. The expectation grew that the Federal Reserve (Fed) might end its tightening cycle as the strong U.S. economy slows down.

Quincy Crosby, Chief Global Strategist at LPL Financial, said, "Both traders and investors want to see follow-up actions that can cement today's market moves," adding, "This will help confirm that the stock market rally is a feasible move as we head into September."

The employment data released the previous day also indicated that the overheated economy is calming down. According to the Department of Labor's JOLTS report, private sector job openings in July were 8.8 million, down 338,000 (5.3%) from the previous month. This is the lowest level since March 2021 (8.4 million) and significantly below market expectations of 9.5 million. The Conference Board (CB) reported that the U.S. Consumer Confidence Index for August was 106.1, below both the revised July figure of 114.0 and market expectations of 116.0.

Sonu Bhages, Global Macro Strategist at Carson Group, stated, "(Today's market) is returning to a 'bad news is good news' environment," explaining, "Easing economic indicators reduce upward pressure on (bond) yields, which benefits stock prices."

The yield on the U.S. 10-year Treasury note fell 1.5 basis points (1 bp = 0.01%) to 4.107% as of 4:46 p.m. that day compared to the previous trading day.

The market is awaiting the release of the Personal Consumption Expenditures (PCE) price index on the 31st. The PCE price index is one of the key indicators closely watched by the Fed. On the 1st of next month, the nonfarm payroll employment data will be released.

This content was produced with the assistance of AI translation services.