[New York Stock Exchange] Stocks Rebound After Employment Shock... Nasdaq Up 2% on September Rate Cut Expectations

After Sharp Decline on Employment Slowdown, Bargain Buying Flows In
Probability of September Rate Cut Rises Above 90%
Tech Stocks Surge... Nvidia Up 3.6%, Tesla Up 2.2%
U.S. to Enforce Reciprocal Tariffs on the 7th... U.S.-China Tariff Truce Expected

The three major indices of the New York Stock Exchange in the United States all closed higher on the 4th (local time). Although the market plummeted on the previous trading day, the 1st, due to an employment shock, a rebound was achieved as bargain buying, especially in technology stocks, flowed in. Additionally, the contraction in employment fueled expectations for a possible interest rate cut in September, which also drove the rally.

AFP Yonhap News

On this day at the New York Stock Exchange, the blue-chip Dow Jones Industrial Average closed at 44,173.64, up 585.06 points (1.34%) from the previous trading day. The S&P 500, which focuses on large-cap stocks, jumped 91.93 points (1.47%) to 6,329.94, marking its largest daily gain since May. The technology-heavy Nasdaq rose 403.45 points (1.95%) to end at 21,053.58.

The recovery in the stock market was led by a surge in bargain buying. On the 1st, the market had plunged after the U.S. Department of Labor released July employment data that was far weaker than expected. However, hopes that the slowdown in employment could increase the likelihood of an interest rate cut led to bargain hunting on this day.

According to the Department of Labor, nonfarm payrolls in July increased by only 73,000, far below the market expectation of 106,000. Employment figures for May and June were also revised downward to 19,000 and 14,000, respectively, from the previously announced 144,000 and 147,000. As a result, the average increase in nonfarm payrolls over the past three months remained at 35,000, showing a significant slowdown from over 100,000 a year ago.

After the deterioration in employment data, investors increasingly expected the U.S. Federal Reserve (Fed) to cut interest rates in September, which also acted as a positive factor for the stock market. According to CME FedWatch, as of this day, the probability that the Fed will cut the benchmark rate by 0.25 percentage points from the current annual rate of 4.25-4.5% in September is 92.1%. This figure is nearly 30 percentage points higher than the 63.1% recorded a week ago.

Adam Crisafulli, a strategist at Vital Knowledge, said, "The market is rebounding after Friday's (the 1st) employment downturn," and added, "Bulls still hold the initiative in market trends, but more concrete catalysts are needed to restore confidence."

Mark Hackett, chief market strategist at Nationwide, analyzed, "Traditional institutional investors see seasonal trends as bearish, but individual investors are viewing this decline as a buying opportunity, resulting in a tug-of-war between the two sides this week," and added, "It's a good opportunity to test who is leading the market."

Tariff policy is also drawing attention. President Trump is scheduled to implement reciprocal tariffs of 10-41% on major trading partners worldwide starting on the 7th. On this day, he warned that he would "significantly increase" tariffs on Indian imports, citing India's large-scale purchases of Russian oil. As trade negotiations with India stalled, he raised the pressure by suggesting the possibility of additional tariffs beyond the previously announced 25% reciprocal tariff.

The United States and China are also expected to extend their existing agreement to each lower tariffs by 115 percentage points for 90 days. Currently, the U.S. imposes a 30% tariff on Chinese products, while China imposes a 10% tariff on U.S. products. These measures are set to expire on the 11th. Both sides reached a tentative agreement to extend the tariff suspension during the third round of high-level trade talks held last week and are currently conducting follow-up negotiations.

Additionally, investors are focusing on Palantir's earnings scheduled after the market close on this day, as well as AMD's earnings announcement the following day.

U.S. Treasury yields are on the decline. The yield on the benchmark 10-year U.S. Treasury note fell 3 basis points (1bp=0.01 percentage point) from the previous trading day to 4.19% and 4.22%. The yield on the 2-year Treasury note, which is sensitive to monetary policy, dropped 2 basis points from the previous day to 3.67%.

By stock, Tesla rose 2.19%. The board of directors approved a stock option package worth $29 billion (about 40 trillion won) for CEO Elon Musk, reflecting expectations that Musk will remain at the helm of management. Nvidia jumped 3.62%, and Microsoft (MS) climbed 2.2%, showing strength in technology stocks. Tyson Foods gained 2.44% after reporting earnings that exceeded market expectations. Spotify surged 5.01% after announcing a premium individual subscription fee increase in some markets.