US Stocks Climb as Weak Jobs Data Lifts Hopes of December Rate Cut

Analysts said markets quickly shifted to a “bad news is good news” mindset, interpreting the soft hiring numbers as a catalyst for the Fed to deliver another rate cut next week. “The market is happy with what the weaker-than-expected jobs report will mean for the Fed,” said Sam Stovall of CFRA Research, adding that optimism around a December cut has returned.

All three major US indexes finished in positive territory: the S&P 500 gained 0.3%, the Nasdaq Composite rose 0.2%, and the Dow Jones Industrial Average advanced 0.9%. Futures markets now place the probability of a rate cut at nearly 90%.

Stephen Brown of Capital Economics said the ADP decline should be “enough to persuade the Fed to vote for another cut next week.” Lower borrowing costs typically support equities by reducing financing pressures for companies and households.

Investor sentiment was also buoyed by reports that Kevin Hassett, a strong advocate of additional rate cuts and a key economic adviser to former President Trump, is the frontrunner to lead the Fed once Jerome Powell’s term ends in May.

Currency markets moved sharply as expectations firmed. The euro rose to a seven-week high against the dollar, while the pound gained around one percent after better-than-expected UK services-sector data. A stronger pound weighed on London’s FTSE 100, which closed 0.1% lower.

Bitcoin’s rebound above $90,000 added further support to risk assets, with analysts noting a renewed speculative push in crypto markets after last month’s steep drop from record highs.

Asian markets closed mixed earlier in the day, with Tokyo’s Nikkei 225 up 1.1%, while Hong Kong and Shanghai finished lower.