Today’s rally was largely sparked by fresh labor data that showed the U.S. economy added only 73,000 jobs in July, far below expectations. Even more striking was the major downward revision of previous months’ numbers—cut by 258,000 jobs—marking the biggest revision since 1968.
This slowdown gave markets a reason to cheer, oddly enough, as it increased the likelihood of Federal Reserve interest rate cuts as early as September. Investors now see an 85% chance of a rate cut next month, with at least two more cuts expected before the end of 2025.
That shift in expectations set off a buying spree across equities, with the Dow Jones up 500 points, the S&P 500 rising 0.78%, and the Nasdaq climbing nearly 1% on the day.
Tech stocks, especially the big names in the Nasdaq Composite, were among the top gainers as hopes rose for cheaper borrowing costs. Market optimism also spread across sectors like communication services, real estate, and consumer discretionary, offering relief after a turbulent end to last week.
- Microsoft (MSFT): Up ~2.3%, strong AI cloud momentum
- Apple (AAPL): Gained over 2%, stable earnings outlook
- Nvidia (NVDA): Rose ~3%, riding the AI chip wave
- Palantir (PLTR): Continued climb, now S&P 500’s YTD leader
- IDEXX Laboratories (IDXX): Best gainer in the S&P 500 today after blowout earnings
Soft July jobs report triggers rate cut optimism
At the heart of this rebound was the latest non-farm payroll data, which showed the U.S. economy added only 73,000 jobs in July—a massive miss from Wall Street’s expectations. Making things worse, revisions to May and June shaved off over 250,000 jobs from previous estimates. The unemployment rate also ticked up to 4.2%, while labor force participation slightly dropped.
This slowdown in the labor market has strengthened investor belief that the Federal Reserve will move forward with interest rate cuts as early as September. According to the CME FedWatch tool, traders now see an 85% chance of a rate cut in the next Fed meeting, and they’re pricing in up to 100 basis points of cuts by the end of 2025.
Federal Reserve under political spotlight as data credibility questioned
President Donald Trump, who is currently serving his second term, has put fresh pressure on the Federal Reserve and federal agencies. In a surprise weekend move, Trump fired the commissioner of the Bureau of Labor Statistics (BLS) following the disappointing jobs report, raising concerns about the political independence of key economic data agencies.
Additionally, Fed Governor Adriana Kugler announced her resignation, intensifying speculation that the Trump administration may reshape the Federal Reserve’s leadership ahead of critical policy decisions. The President has openly called for more aggressive rate cuts, framing the current economic slowdown as an opportunity to support American households and boost consumer confidence.
Top Stocks to Watch Now
Apple (AAPL)
Apple is holding strong near $203/share with a market cap of over $3 trillion. A well-established leader in consumer devices and services, it continues to generate solid earnings and cash flow.
Microsoft (MSFT)
Microsoft’s shares trade around $536, fueled by soaring demand for Azure cloud services and AI investments. Analysts praise its growth and expect strong momentum ahead.
Alphabet (GOOGL)
Google’s parent company sits near $195/share with a focus on search advertising, cloud, YouTube, and AI opportunities. Valuation remains attractive relative to peers.
Treasury yields fall, gold hits record high as dollar weakens
The weak payroll data sparked a sharp drop in U.S. Treasury yields, particularly on the 2-year note, reflecting the market’s strong expectation for easing monetary policy. At the same time, the U.S. dollar slid against major global currencies, including the euro and yen, helping boost demand for commodities.
Gold prices surged past $3,400 an ounce, hitting a new all-time high as investors sought safer assets. Analysts at Citi even lifted their gold outlook, forecasting prices may soon reach $3,500 to $3,600 per ounce if rate cut momentum continues and economic uncertainty grows.
Oil prices slide as OPEC+ raises production
While equities soared, oil markets moved in the opposite direction. Crude oil prices dropped on news that OPEC+ has agreed to increase oil production in September, aiming to cool off global prices. This weighed on energy stocks and raised concerns about potential oversupply in the months ahead.
Lower oil prices could benefit consumers and help slow inflation, giving the Federal Reserve even more flexibility to ease monetary policy. However, energy sector stocks lagged behind Monday’s rally due to weaker pricing power.
Other Notable Movers
- Palantir (PLTR): The S&P 500’s best performer year-to-date, up over 100%, driven by AI growth and government contracts. But sky-high valuation (~690× P/E) presents risk.
- IDEXX Laboratories (IDXX): A standout performer Monday, shares soared after strong quarterly results and raised guidance, pushing it to lead the S&P 500 rally.
- Wayfair and Others: Wayfair surged double digits on better-than-expected earnings, helping fuel broader sentiment across the market.
Key earnings and economic reports to watch this week
Investors will be watching closely as more corporate earnings roll out this week. Major names like Disney, AMD, Eli Lilly, and Palantir are set to report, and their guidance could further validate—or contradict—Wall Street’s growing belief in an economic soft landing.
Here’s what’s coming up:
| Date | Report/Event | Why It Matters |
| Aug 5–6 | ISM Services PMI, Jobless Claims | Could confirm labor market softening |
| Aug 7 | Consumer Credit Data | Indicates consumer spending and debt sustainability |
| Aug 8 | Fed speeches and Treasury remarks | May offer insight into policy direction |
| All week | Q2 earnings (Disney, AMD, Eli Lilly) | Tech and healthcare guidance will shape sentiment |
Wall Street rally driven by Fed pivot bets
Today’s strong stock market rebound reflects renewed investor confidence in interest rate cuts, fueled by soft job market data and growing signs of economic moderation. While optimism is high, the market remains on edge as the Federal Reserve navigates political pressure, inflation goals, and evolving economic risks.
For now, traders are betting that lower rates will give equities another leg up, but upcoming earnings, inflation data, and Fed commentary will ultimately determine if this bounce marks a turning point—or just a brief relief rally.
What investors should watch now
Here’s what smart investors are keeping an eye on:
- More economic data this week, including factory orders and weekly jobless claims, which could confirm or challenge the softening labor trend.
- Earnings season, which has so far been strong, with over 80% of S&P 500 companies beating expectations—helping support overall market strength.
- Tech sector momentum, especially AI-related stocks like Nvidia, Microsoft, and Palantir, which continue to lead the rally.
- Political volatility, as Trump’s influence over economic institutions and Fed policy becomes a bigger factor heading into the 2026 election cycle.
FAQs:
Q1: Why did the stock market rally today after the weak payroll report?
The weak jobs data boosted hopes that the Federal Reserve will cut interest rates soon.
Q2: How did President Trump respond to the July jobs report?
Trump fired the BLS commissioner, raising new questions about the Fed’s independence and economic data credibility.
