The U.S. stock market displayed positive momentum on Tuesday as investors analyzed indicators pointing towards a cooling labor market and declining consumer confidence. These developments could potentially alleviate the need for further interest-rate hikes by the Federal Reserve.
Key Figures
- The S&P 500 (SPX) rose by 64.44 points, or 1.5%, to reach 4,497.67, according to preliminary closing data from FactSet.
- The Dow Jones Industrial Average (DJIA) experienced a gain of 292.96 points, or 0.9%, closing at 34,852.94.
- The Nasdaq Composite index (COMP) witnessed an increase of 238.63 points, or 1.7%, settling at 13,943.76.
Labor Market Trends
Recent data revealed that the number of job openings in July decreased to 8.8 million, falling short of the projected 9.5 million. This signifies that employers have begun to significantly scale back on their hiring activities. Furthermore, approximately 3.5 million individuals quit their jobs last month, marking the lowest levels in two-and-a-half years.
Decline in Consumer Confidence
In August, a consumer confidence gauge generated by the Conference Board dropped to 106.1, down from 114. This decline in consumer sentiment has attracted attention from investors. Interestingly, they have been buoyed by data suggesting that the deceleration of the U.S. labor market and economy could result in favorable outcomes. Market strategists have coined this phenomenon as “bad news is good news.” The reasoning behind it is that a slowdown in economic growth rate could enable the Federal Reserve to more easily rationalize swift interest rate cuts, thereby curbing inflation.
As a result of these developments, U.S. stocks experienced upward momentum on Tuesday.
