Accompanying strength on rate-cut expectations… S&P 500 hits another record high [New York Stock Market Briefing]

The three major U.S. stock indices in New York closed higher together. As U.S. employment-related indicators slowed, expectations grew that the central bank (Fed) will cut the policy rate, and optimism was maintained as the services sector continued to show strength. The decline in U.S. Treasury yields, which increased the appeal of risk assets, also added momentum.

On the 4th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 45,621.29, up 350.06 points (0.77%) from the previous session. The Standard & Poor's (S&P) 500 index closed at 6,502.08, up 53.82 points (0.83%), and the technology-heavy Nasdaq Composite closed at 21,707.69, up 209.97 points (0.98%). The S&P 500 index hit a record high again after four trading days.

U.S. employment indicators released that day fell short of market expectations, stimulating investor sentiment. According to the Automatic Data Processing (ADP) National Employment Report, private payrolls increased by 54,000 in August from the previous month, missing the market forecast of 65,000. Considering that July's figure was 106,000, the increase was roughly halved.

As the labor market showed overall cooling signals, a September rate cut this month has become the market consensus. According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the federal funds futures market reflects a 99.4% probability of a 0.25% percentage-point rate cut in September. The probability of a 0.75% percentage-point cut by December rose to 48.4%, up 5 percentage points from the previous close.

Jamie Cox, managing partner at Harris Financial Group, said, "The ADP data continue to support the argument that the pace of positive change in the labor market has slowed considerably," and predicted, "The Fed will balance the risks with a September rate cut."

The strength in the services sector that day stimulated buying sentiment in the market. The stock indices, which had remained slightly firm in early trading, steadily increased their gains. The Institute for Supply Management (ISM) services Purchasing Managers' Index (PMI) for August came in at 52.0, beating the forecast of 51.0.

The two-day decline in Treasury yields also highlighted the appeal of risk assets such as stocks. After U.S. President Donald Trump's tariff policy was ruled illegal on appeal, the 30-year Treasury yield, which had been shaken by fiscal uncertainty, fell about 0.1% percentage point over two days.

By sector, all sectors except utilities rose. Consumer discretionary surged more than 2%, while financials, industrials and communication services each rose more than 1%.

Among mega-cap tech firms with market caps over $1 trillion, Amazon rose more than 4%. The move was attributed to Anthropic, an AI company Amazon invested in, securing large-scale funding.

U.S. apparel retailer American Eagle jumped 38% after reporting second-quarter results that beat expectations. Fashion retailer Gap rose 6% after announcing an expansion into cosmetics-related business.

On the other hand, U.S. cloud software firm Salesforce fell more than 4% after its third-quarter outlook fell short of market expectations.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) fell 1.05 points (6.42%) to 15.30.

Reporter Ko Jeong-sam, Hankyung.com jsk@hankyung.com