Breadth returns to stocks.

US stocks wobbled but demonstrated breadth on Thursday. Photo: Jeenah Moon | Bloomberg

Breadth returns | Despite fluctuations in US stocks Thursday, one thing was clear: Breadth is back. While the S&P 500 Index lost traction later in the day and Nvidia shares continued their decline, most stocks advanced following data that showed the US economy is holding up better than expected. Energy firms, banks, and industrial companies — businesses that are more sensitive to expectations for growth — were among the biggest gainers. To Bret Kenwell at eToro, the latest data helped reassure investors that the economy is “not teetering on an economic cliff.”

Traders await Powell' Jackson Hole speech.

Federal Reserve Chair Jerome Powell. Photo: David Paul Morris | Bloomberg

Awaiting Powell | Bond yields climbed, and stocks struggled, with traders betting Jerome Powell will throw cold water on market expectations for aggressive rate cuts. In the run-up to the Fed Chair’s Jackson Hole speech, Treasuries fell, with the move led by shorter maturities. The dollar gained while the S&P 500 lost steam after getting close to its all-time high. Starting in September, the swap market cemented wagers that the Federal Reserve will ease policy by one percentage point this year. On the economic front, the latest figures were a “mixed bag.” Jobless claims data showed the labor market is cooling only gradually while manufacturing activity shrank at the fastest pace this year. Existing home sales rose for the first time in five months.

US stocks climb as bonds tumble.

Equity rebound | Stocks climbed, and bonds tumbled as data on retail spending and the labor market underscored the strength of the US economy, allaying fears the Federal Reserve would be risking a deeper slowdown. As economic jitters abated, equities extended a rebound from last week’s meltdown into a sixth straight session. The S&P 500 rose about 1.6%, while the Nasdaq 100 added 2.4%. Treasury yields surged, with the move led by shorter maturities. US officials have been trying to use higher rates to ease inflation without causing the economy to contract — a scenario known as a “soft landing.” 

US stocks are bouncing back.

Stocks rebound | US stocks had their best day since 2022. Equities staged a solid rebound, and bonds fell after the latest US labor market reading, which helped ease fears about a more pronounced slowdown in the world’s largest economy. All major groups in the S&P 500 advanced, as data showed US initial jobless claims tumbled the most in nearly a year. As economic angst subsided, Treasuries dropped across the curve — with the selloff led by shorter maturities.

US stocks sink ahead of jobs data.

Wall Street sees weak economic data fueling outlook for rate cuts. Photo: Michael Nagle | Bloomberg

Cuts ahoy | US stocks fell sharply as bonds rallied after a fresh dose of weak economic data led traders to reconsider whether the Federal Reserve is wise to hold off cutting rates before September. Unemployment claims hit an almost one-year high, and manufacturing activity shrank. Thursday’s price action was another episode of extreme day-to-day volatility that has featured rapid rotations into and out of asset classes and sectors, with investors choosing Treasuries as the latest haven trade. The Nasdaq 100 saw its biggest one-day reversal since May 2022, while the S&P 500 fell. US 10-year yields broke below 4%, while swap traders are now fully pricing in three quarter-point rate cuts from the Fed this year. Jerome Powell signaled this week that officials are on course to cut rates in September unless inflation progress stalls. All eyes will now turn to the official US jobs report Friday to see if traders’ views on easing are warranted.