S&P 500 hits record high as stocks rise after latest jobs report

U.S. stocks rose as investors reacted to the softer-than-expected jobs report, with the S&P 500 and Nasdaq inching higher to lead the bounce for major gauges.

The S&P 500 gained 0.4% to a record 6,537, and the Dow Jones Industrial Average added 50 points as the tech-heavy Nasdaq opened up 0.9% as August’s soft labor data further ignited Wall Street’s bets on a Federal Reserve interest rate cut in September.

Gains across the stock market also cascaded into cryptocurrencies, with Bitcoin ( BTC ) rising 3% to above $113k and Ethereum ( ETH ) gaining nearly 2% to above $4,470.

U.S. jobs report buoys stocks

On Friday, the Bureau of Labor Statistics released the U.S. jobs report for August. Key is the detail that the U.S. economy added only 22,000 jobs in August, well short of the estimated 75,000.

Meanwhile, the unemployment rate rose to 4.3%, and the broader jobless rate inched up to 8.1%, with the overall picture indicating a labor market in trouble.

This is the first negative jobs report since 2020, and things look even bleaker given revisions to monthly data have not helped. Notably, June’s figures were revised to a loss of 13,000 jobs, with the last three months showing the labor market added more than 8,000 fewer jobs than previously reported.

With this outlook in place, investors are ramping up bets on the Fed cutting interest rates at the coming meeting.

“This data essentially guarantees a 25 basis point Federal Reserve interest rate cut in 12-days time,” said top economist and Allianz advisor Mohamed El-Erian. “The weak report also reinforces the view that the Fed should have cut rates sooner, particularly last July. It may even prompt some discussions about the possibility of a more aggressive 50 bps cut at the upcoming meeting.”

The bullish move for stocks means the major gauges are headed for a green week after opening on a negative note following the Labor Day holiday. The S&P 500 at record highs could allow Wall Street to target the projected jump to 6,600 by the end of the year.