Wall Street could be marching into a bad-news-is-good-news environment, as deteriorating labor market data bolsters the odds of imminent rate cuts — potentially giving stocks the lift they need to break new records.
After a brief pullback from last week’s all-time highs, the S&P 500, tracked by the Vanguard S&P 500 ETF (NYSE:VOO), recovered strongly and now sits just 0.5% below its all-time high.
Investors appear ready to reward weak jobs data, with hopes the Federal Reserve may finally pivot to easing policy as early as this month.
Labor market weakness: How bad is it?
July’s official jobs report delivered a significant downside surprise, with just 73,000 jobs added, far below the typical monthly range needed to sustain healthy employment growth.
Economists are bracing for another weak print in Friday’s non-farm payrolls report, with the consensus looking for just 75,000 new jobs in August.
On Thursday, private payrolls data from the ADP National …