U.S. stocks rebounded Monday, reversing Friday’s payroll-driven sell-off as investors grew optimistic about potential interest rate cuts. At 09:35 ET, the Dow Jones Industrial Average rose 268 points (0.6%), the S&P 500 gained 45 points (0.7%), and the NASDAQ Composite added 210 points (1%).
Friday’s sharp decline saw the S&P 500 record its worst day in over two months after President Trump signed an executive order imposing steep tariffs on imports from nearly 70 countries. Sentiment was further rattled by a weak jobs report, which revealed significant downward revisions to previous payroll figures, and by Trump’s abrupt firing of the head of the statistics bureau, alleging — without evidence — that the jobs data were “rigged.” Analysts warned that the move undermines confidence in the reliability of U.S. economic data.
Weak jobs report boosts rate cut expectations
Investors focused Monday on factory orders for June, amid concerns about slowing economic growth after the Labor Department reported nonfarm payrolls increased by just 73,000 in July — far below expectations of 110,000. Revisions to May and June data showed a combined 258,000 fewer jobs than previously estimated. This soft labor market fueled bets on a September Federal Reserve rate cut, with market odds climbing above 80%.
Morgan Stanley strategist Mike Wilson reiterated a bullish outlook on U.S. stocks Monday, saying the bank would buy into market weakness despite anticipating a modest third-quarter pullback. “We’ve been bullish the past few months thanks to the V-shaped recovery in earnings revisions breadth,” Wilson noted, adding that April’s “Capitulation Day” and “Liberation Day” ended the 2024 bear market and signaled a new bull phase. He emphasized, “We’re buyers of pullbacks and bullish for the next 12 months.”
Big earnings ahead: AMD, Caterpillar, Disney
Attention now turns to a packed earnings calendar, with over 150 companies set to report this week. Highlights include Advanced Micro Devices (AMD) and Caterpillar on Tuesday, offering insights into semiconductor demand and global industrial trends. Wednesday will bring results from Walt Disney, McDonald’s, and Uber Technologies.
The earnings season has so far been robust, reinforcing optimism about the continued boom driven by artificial intelligence applications.
In other news, Berkshire Hathaway shares slipped after posting a $3.76 billion write-down on its Kraft Heinz stake. Meanwhile, Tesla shares rose after the board approved a 96 million share restricted stock award for CEO Elon Musk, based on a recommendation from independent directors.
Oil prices slide as OPEC+ boosts output
Crude oil prices fell sharply Monday after OPEC+ agreed to a significant production increase in September, expanding global supply. At 09:35 ET, Brent futures dropped 2.2% to $68.15 per barrel, while U.S. West Texas Intermediate futures declined 2.4% to $65.69.
OPEC+ announced a planned hike of 547,000 barrels per day next month, marking a decisive reversal of earlier production cuts totaling about 2.5 million barrels per day — roughly 2.4% of global demand.
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