- A decline in monthly job openings solidified expectations of a Fed pause.
- The Nasdaq recorded its strongest session since July 28.
- There was a decline in US consumer confidence to 106.1 in August.
US equities surged on Tuesday as Tesla, Nvidia, and other mega-cap growth stocks drove the rally following a decline in monthly job openings. The decline solidified expectations of the US Federal Reserve hitting a pause on interest rate hikes.
The S&P 500 marked its most robust daily upswing since June 2, while the Nasdaq recorded its strongest session since July 28. Both indices concluded at highs unseen in over two weeks.
US job openings (Bureau of Labor Statistics)
These substantial gains followed the release of the Job Openings and Labor Turnover Survey. The survey revealed that job openings had reached 8.827 million in July. This marked the third month of decline, suggesting a relief in labor market tensions.
Investors also scrutinized a report from the Conference Board indicating a decline in US consumer confidence to 106.1 in August, in contrast to the anticipated 116.
Meanwhile, interest rate futures indicated an 87% likelihood that the Fed would maintain steady rates during its September meeting. Moreover, there is a 54% likelihood of rates remaining unchanged through November, according to the CME Group’s FedWatch tool.
Sam Stovall from CFRA Research remarked, “Investors are thinking that interest rate hikes might be in the past. Therefore, they’re reentering the stock market.”
The yield on the 10-year Treasury note dipped to 4.11%, while the yield on the two-year note dipped below 5% after hovering at that level in recent sessions. Investors will now watch the upcoming July non-farm payrolls report and the Thursday release of the personal consumption expenditures index, the Fed’s favored measure of inflation.
Stocks experienced an upswing on Monday after Federal Chair Jerome Powell’s Jackson Hole symposium remarks lacked hawkish surprises. The focus now shifts to forthcoming economic data that will help assess how long the central bank intends to maintain elevated interest rates.
Meanwhile, European equities closed at a two-week peak on Tuesday, led by miners due to solid metal prices. The Netherlands’ top insurer, NN Group, also contributed with robust capital generation. UK shares outperformed regional counterparts after a prolonged weekend.
China’s recent policy action of cutting stamp duty on stock trades, along with the anticipation of a halt in US interest rate hikes, boosted investor sentiment. This pushed Eurozone bond yields down.
