Wall Street Rallies on Historic Jobs Revision and Rate Cut Optimism
Global financial markets saw significant movement as Wall Street closed higher, buoyed by growing anticipation of imminent interest rate cuts by the Federal Reserve. The catalyst was a landmark revision by the Bureau of Labor Statistics, which slashed nearly a million jobs from previous payroll figures, revealing a far weaker U.S. labor market than previously believed. This historic adjustment heightened expectations that the Fed will soon pivot to monetary easing, with traders assigning over a 90% probability to a rate cut at the upcoming September meeting.
Technology and AI Drive Market Gains
Investor enthusiasm was further fueled by a surge in technology shares, most notably Oracle Corporation. Despite missing its earnings per share target, Oracle’s stock soared to a record high thanks to an aggressive outlook for its cloud and artificial intelligence business. The company reported a dramatic increase in future bookings, signaling robust demand for AI-driven solutions. This optimism spilled over into the broader tech sector, reinforcing the market’s confidence in the long-term growth potential of artificial intelligence.
Gold Hits Record High Amid Policy Uncertainty
Gold prices experienced their largest weekly jump in months, reaching a new all-time high. The rally was driven by rising expectations of a significant Fed rate cut and persistent uncertainty in global economic policy. As investors sought safe havens amid volatility, gold benefited from both the weakening dollar and fears of slowing economic growth.
Currency and Commodity Volatility
Currency markets were highly volatile. The euro-dollar pair initially climbed to a one-month high before retreating, pressured by disappointing Eurozone retail sales data. The British pound edged higher, supported by stronger-than-expected economic data that temporarily eased concerns about the UK’s fiscal outlook. Meanwhile, the Japanese yen weakened slightly against the dollar, reflecting mixed domestic data and cautious signals from the Bank of Japan regarding further rate hikes.
Oil prices declined following the expiration of a White House deadline to Russia, which passed without the imposition of new sanctions or tariffs. OPEC+ announced a modest increase in output starting in October, a move that added to downward pressure on crude prices.
Geopolitical Tensions and Trade Policy
Trade policy developments also made headlines as the White House intensified its push for the European Union to adopt a 100% tariff on goods from China and India. This aggressive stance is a response to ongoing support from those countries for Russia in the Ukraine conflict. The U.S. pledged to match any EU tariffs, aiming to present a united front and increase pressure on Moscow. These moves underscore the growing intersection of trade and geopolitics in shaping global financial markets.
Central Bank Drama: Fed Governance in the Spotlight
In a notable legal development, a federal judge issued a temporary restraining order preventing President Trump from firing Federal Reserve Governor Lisa Cook. This decision ensures Cook’s participation in the critical upcoming policy meeting, where the Fed is expected to deliberate on rate cuts. However, the ultimate authority over Fed appointments may be decided by the Supreme Court, injecting further uncertainty into central bank governance.
Market Outlook: Rate Cuts, AI, and Global Risks
Looking ahead, investors are closely watching for further economic data, particularly inflation figures, that could influence the Fed’s next move. The combination of a cooling labor market, surging enthusiasm for AI, and heightened geopolitical risks is likely to sustain market volatility. As central banks and policymakers respond to these shifting dynamics, financial markets remain on alert for both opportunities and challenges in the months ahead.