Wall Street Rises as 'Thanksgiving Buffet' Jobs Data Fuels Rate Cut Bets

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Wall Street extended its gains on Thursday as investors interpreted a mixed U.S. jobs report as a signal that the Federal Reserve might consider cutting interest rates sooner than expected. Dubbed the "Thanksgiving buffet" of jobs data, the report provided a mix of employment metrics that highlighted a cooling labor market, boosting optimism in the stock market.



Key Data and Market Reactions

The U.S. Labor Department's report showed a smaller-than-expected increase in nonfarm payrolls, accompanied by a slight rise in unemployment and slower wage growth. These indicators suggest that the Fed’s efforts to tame inflation through higher interest rates are yielding results without causing significant economic disruption.

In response, major indices surged:

  • The Dow Jones Industrial Average climbed 1.3%.
  • The S&P 500 rose by 1.6%, closing at its highest level in months.
  • The Nasdaq Composite led gains with a 2% rally, driven by tech stocks.

Rate Cut Expectations Strengthen

The softening labor market bolstered investor sentiment that the Fed might pivot to cutting rates as early as mid-2024. Futures markets are now pricing in a higher likelihood of rate cuts, with the probability of a July reduction rising to 60%, according to CME FedWatch data.

"Today's jobs data hit the sweet spot," said a senior market analyst. "It shows enough cooling to convince the Fed that inflationary pressures are waning but not so much that it signals a recession."

Sector Performance

Technology and consumer discretionary stocks outperformed, with mega-cap tech giants like Apple, Microsoft, and Amazon leading the charge. Financial stocks also gained as the prospect of lower interest rates spurred optimism about future lending conditions.

Meanwhile, energy stocks remained subdued, weighed down by declining oil prices amid concerns over global demand.

Looking Ahead

Investors will now turn their focus to upcoming inflation and consumer spending reports, which could further shape expectations for the Fed’s monetary policy trajectory. As Wall Street cheers the possibility of rate cuts, analysts caution that the Fed may still need more convincing evidence of sustained economic resilience.

For now, the markets are riding high, with hopes that the Fed’s policy pivot could set the stage for a more favorable investment climate in 2024.

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