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US stocks raced ahead on Thursday, with the S&P 500 reaching another all-time high.
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It’s a sign investor psychology has changed to good news being good news.
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Markets don’t seem to care that the Fed likely isn’t cutting rates in July, analysts said.
For investors, good news is good news again.
US stocks rallied on Thursday, with the Dow Jones Industrial Average gaining more than 300 points and the S&P 500 clinching another record high.
The jump followed a strong June jobs report, which showed that the US added more jobs than economists originally expected last month, while also revising May’s data upward. The unemployment rate unexpectedly ticked down to 4.1%.
“Markets are on track for their seventh record high of the year, propelled by a strong payrolls report and a renewed ‘good news is good news’ mindset,” Mark Hackett, chief market strategist at Nationwide, wrote in a note prior to the closing bell. “Investor focus is shifting back to the economy’s underlying strength, with less emphasis on the Fed.”
Here’s where US indexes stood at the 1 p.m. ET closing bell on Wednesday:
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S&P 500: 6,279.35, up 0.83%
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Dow Jones Industrial Average: 44,828.53, up 0.77% (+344.11 points)
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Nasdaq composite: 20,601.10, up 1.02%
Bond yields were up. The 10-year Treasury yield rose five basis points, while the 2-year yield jumped nine basis points.
The move to new records for stocks on Thursday signals a key shift among investors, who have often digested strong economic data as a negative development, as it lowers the chances for a rate cut.
But the stronger-than-expected jobs report was cheered as a signal of continued economic strength, even as interest rate cuts have likely been pushed out past this summer, according to David Laut, the chief investment officer at Abound Financial.
“Thursday’s jobs report was stronger than expected, which shows that the resiliency we have been seeing in the economy over the past several months is still intact,” Laut wrote in a note.
The odds of a July rate cut were slashed shortly after the jobs report, with market participants pricing in a 4.7% chance the Fed could trim rates at its next policy meeting, according to the CME FedWatch tool.
Read the original article on Business Insider
