Wall Street reacts to horrible July jobs report: September rate cut is back on the table
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37 minutes ago
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'On the precipice of recession': A top economist warns that not even the Fed may be able to rescue the US from a downturn
Mark Zandi, chief economist of Moody's, has a grim prediction for the US economy. He said he sees the US economy teetering at the edge of a recession. Zandi attributes economic pressures to to Trump's tariffs and immigration policy. The top economist at Moody's has some thoughts on the economy's future, and they're not particularly upbeat. Mark Zandi, chief economist at Moody's Analytics, said over the weekend that he believes a recession is likely, and that even eagerly anticipated rate cuts from the Federal Reserve probably won't stave off a downturn. The economist said in a series of posts on X that the US economy is "on the precipice of recession," with consumer spending weakening and risks facing both construction and manufacturing. "With inflation on the rise, it is tough for the Fed to come to the rescue," Zandi said. President Donald Trump has repeatedly demanded that the central bank slash interest rates this year, with some officials recently backing those calls. They argue that the Fed risks being too late to support a weakening labor market. But Zandi thinks a recession is coming regardless, and rate cuts won't be able to offset two forces he thinks are pressuring the economy: tariffs and immigration policy. "The tariffs are cutting increasingly deeply into the profits of American companies and the purchasing power of American households," he said. "Fewer immigrant workers means a smaller economy." While Zandi acknowledged that the unemployment rate has remained low, he added that the growth of the US labor force has "gone sideways" as participation falls and the foreign-born workforce continues to shrink. Recent data show that the US labor market is struggling more many observers thought. Figures from the Bureau of Labor Statistics showed that US employers added 73,000 jobs in July, much less than economists were expecting. Many job seekers have also reported bleak prospects as companies scale back hiring. Read the original article on Business Insider Sign in to access your portfolio
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37 minutes ago
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Stocks Rally on Fed Rate Cut Speculation
The S&P 500 Index ($SPX) (SPY) Monday closed up +1.47%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +1.34%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.87%. September E-mini S&P futures (ESU25) rose +1.58%, and September E-mini Nasdaq futures (NQU25) rose +1.96%. Stock indexes rallied sharply on Monday as they recovered from some of last Friday's steep losses. Recent stellar earnings results boosted Magnificent Seven technology stocks and semiconductor chip makers, supporting gains in the broader market. Stocks also have support from speculation that last Friday's dismal payroll and ISM manufacturing reports will prompt the Fed to cut interest rates. The chances of a Fed rate cut at the September FOMC meeting rose to 90% from 40% before the reports were released. More News from Barchart Find Winning Momentum Trades With This Moving Average Stock Screener Tariffs, Earnings and Other Can't Miss Items this Week Dear Nvidia Stock Fans, Mark Your Calendars for August 27 Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines. Monday's US economic news was mixed for stocks. US June factory orders fell -4.8% m/m, right on expectations and the biggest decline in more than 5 years. However, June factory orders ex-transportation rose +0.4% m/m, stronger than the expectations of +0.3% m/m and the largest increase in 7 months. In the latest tariff news, President Trump said Monday that he would be "substantially raising" the tariff on US imports from India from the current 25% due to India's purchases of Russian oil. Last Thursday, President Trump raised tariffs on some Canadian goods to 35% from 25% and announced a 10% global minimum, along with tariffs of 15% or higher for countries with trade surpluses with the US, effective after midnight on August 7. According to Bloomberg Economics, the average US tariff will rise to 15.2% if rates are implemented as announced, up from 13.3% earlier, and significantly higher than the 2.3% in 2024 before the tariffs were announced. The markets this week will focus on earnings reports and any fresh tariff or trade news. On Tuesday, the June trade deficit is expected to narrow to -$61.1 billion from -$71.5 billion in May. Also on Tuesday, the July ISM services index is expected to climb by +0.7 to 51.5. On Thursday, weekly initial unemployment claims are expected to increase by +3,000 to 221,000. Also on Thursday, Q2 nonfarm productivity is expected to be +2.0% with unit labor costs rising +1.5%. Federal funds futures prices are discounting the chances for a -25 bp rate cut at 90% at the September 16-17 FOMC meeting and 70% at the following meeting on October 28-29. Q2 earnings reports released thus far suggest that S&P 500 earnings are on track to rise +9.1% for the second quarter, much better than the pre-season expectations of +2.8% y/y and the most in four years, according to Bloomberg Intelligence. With over 66% of S&P 500 firms having reported Q2 earnings, around 82% exceeded profit estimates. Overseas stock markets on Monday settled mixed. The Euro Stoxx 50 closed up sharply by +1.49%. China's Shanghai Composite rebounded from a 2-week low and closed up +0.66%. Japan's Nikkei Stock 225 fell to a 1.5-week low and closed down -1.25%. Interest Rates September 10-year T-notes (ZNU25) Monday closed up +5.5 ticks. The 10-year T-note yield fell -2.4 bp to 4.192%. Sep T-notes on Monday recovered from overnight losses and rallied to a 3-month nearest-futures high, and the 10-year T-note yield fell to a 1-month low of 4.192%. T-notes have positive carryover support from last Friday's weaker-than-expected payroll and ISM manufacturing reports, which boosted the chance of a Fed rate cut at next month's FOMC meeting to 90% from 40% before the reports. Also, Monday's -1% drop in WTI crude oil prices reduced inflation expectations, a bullish factor for T-notes. In addition, Monday's strength in European government bonds provided carryover support to T-notes. Gains in T-notes were limited by a sharp rebound in equity markets, which curbed safe-haven demand for government securities. Also, supply pressures are weighing on T-notes as the Treasury will auction $125 billion of T-notes and T-bonds in this week's August quarterly refunding, beginning with Tuesday's $58 billion auction of 3-year T-notes. European government bond yields on Monday moved lower. The 10-year German bund yield fell to a 1.5-week low of 2.624% and finished down -5.4 bp to 2.624%. The 10-year UK gilt yield dropped to a 1-month low of 4.501% and finished down -1.9 bp to 4.509%. The Eurozone Aug Sentix investor confidence index unexpectedly fell -8.2 to -3.7, weaker than expectations of an increase to 6.9. Swaps are discounting the chances at 15% for a -25 bp rate cut by the ECB at the September 11 policy meeting. US Stock Movers Strength in the Magnificent Seven technology stocks supported gains in the broader market. Nvidia (NVDA), Alphabet (GOOGL), and Meta Platforms (META) closed up more than +3%. Also, Microsoft (MSFT) and Tesla (TSLA) closed up more than +2%. In addition, Apple (AAPL) closed up +0.48%. Chip stocks rallied on Monday, a supportive factor for the overall market. Broadcom (AVGO) and KLA Corp (KLAC) closed up more than +3%. Also, Advanced Micro Devices (AMD), Micron Technology (MU), Marvell Technology (MRVL), and Lam Research (LRCX) closed up more than +2%. In addition, ARM Holdings Plc (ARM), Applied Materials (AMAT), and ASML Holding NV (ASML) closed up more than +1%. Steelcase (SCS) closed up more than +60% after being acquired by HNI for $2.2 billion or about $18.30 per share. Idexx Labs (IDXX) closed up more than +27% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q2 revenue of $1.11 billion, better than the consensus of $1.07 billion, and raising its full-year EPS forecast to $12.40-$12.76 from a previous forecast of $11.93-$12.43, stronger than the consensus of $12.21. Wayfair (W) closed up more than +11% after reporting Q2 adjusted EPS of 87 cents, well above the consensus of 33 cents. Spotify (SPOT) closed up more than +5% after it said it will increase the monthly cost of premium subscriptions in Markets across South Asia, the Middle East, Africa, Europe, and Latin America. Martin Marietta Materials (MLM) closed up more than +3% after raising its full-year adjusted Ebitda forecast to $2.30 billion from a previous forecast of $2.15 billion-$2.45 billion, stronger than the consensus of $2.27 billion. Tyson Foods (TSN) closed up more than +2% after reporting Q3 sales of $13.88 billion, above the consensus of $13.55 billion. ON Semiconductor (ON) closed down more than -16% to lead losers in the S&P 500 and Nasdaq 100 after forecasting Q3 adjusted gross margin of 36.5% to 38.5%, the midpoint weaker than the consensus of 37.7%. Bruker Corp (BRKR) closed down more than -8% after reporting Q2 revenue of $797.4 million, below the consensus of $810.2 million. LyondellBasell Industries NV (LYB) closed down more than -4% after reporting Q2 adjusted Ebitda of $715 million, weaker than the consensus of $743.9 million. Berkshire Hathaway (BRK.B) closed down more than -3% after reporting Q2 operating earnings fell -3.8% y/y to $11.16 billion. Waters (WAT) closed down more than -1% after forecasting Q3 adjusted EPS of $3.15-$3.25, the midpoint below the consensus of $3.23. Earnings Reports (8/5/2025) Advanced Micro Devices Inc (AMD), Aflac Inc (AFL), Amgen Inc (AMGN), Apollo Global Management Inc (APO), Archer-Daniels-Midland Co (ADM), Arista Networks Inc (ANET), Assurant Inc (AIZ), Ball Corp (BALL), Broadridge Financial Solutions (BR), Caterpillar Inc (CAT), Cummins Inc (CMI), DaVita Inc (DVA), Devon Energy Corp (DVN), Duke Energy Corp (DUK), DuPont de Nemours Inc (DD), Eaton Corp PLC (ETN), Expeditors International of Washington (EXPD), Fidelity National Information (FIS), Fox Corp (FOXA), Gartner Inc (IT), Henry Schein Inc (HSIC), International Flavors & Fragrances (IFF), Jacobs Solutions Inc (J), Leidos Holdings Inc (LDOS), Marathon Petroleum Corp (MPC), Marriott International Inc/MD (MAR), Match Group Inc (MTCH), Molson Coors Beverage Co (TAP), Mosaic Co/The (MOS), News Corp (NWSA), Pfizer Inc (PFE), Public Service Enterprise Group (PEG), Skyworks Solutions Inc (SWKS), Super Micro Computer Inc (SMCI), TransDigm Group Inc (TDG), Yum! Brands Inc (YUM), Zebra Technologies Corp (ZBRA), Zoetis Inc (ZTS). On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
an hour ago
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Shares in Asia rally, dollar lower against yen on Fed rate cut bets
By Rocky Swift TOKYO (Reuters) -Shares in Asia rose for a second consecutive session and the U.S. dollar held most of its losses on Tuesday as investors increased bets the Federal Reserve will act to prop up the world's largest economy. U.S. shares rallied on Monday on generally positive earnings reports and increasing bets for a September rate cut from the Fed after disappointing jobs data on Friday. Oil remained lower after output increases by OPEC+ and threats by U.S. President Donald Trump to raise tariffs on India over its Russian petroleum purchases. Japan's Nikkei rallied, with data showing a jump in the nation's service sector activity in July. "There are signs of weakness in parts of the U.S. economy, that plays to the view that maybe not in September, but certainly this year that the Fed's still on course to ease potentially twice," said Rodrigo Catril, senior currency strategist at National Australia Bank. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.6% in early trade. The Nikkei climbed 0.5% after falling by the most in two months on Monday. The dollar dropped 0.1% to 146.96 yen. The euro was unchanged at $1.1572, while the dollar index, which tracks the greenback against a basket of major peers, edged up 0.1% after a two-day slide. Odds for a September rate cut now stand at about 94%, according to CME Fedwatch, from a 63% chance seen on July 28. Market participants see at least two quarter-point cuts by the end of this year. The disappointing nonfarm payrolls data on Friday added to the case for a cut by the Fed, and took on another layer of drama with Trump's decision to fire the head of labor statistics responsible for the figures. News that Trump would get to fill a governorship position at the Fed early also added to worries about politicisation of interest rate policy. Trump again threatened to raise tariffs on goods from India from the 25% level announced last month, over its Russian oil purchases, while New Delhi called his attack "unjustified" and vowed to protect its economic interests. Second-quarter U.S. earnings season is winding down, but investors are still looking forward to reports this week from companies including Walt Disney and Caterpillar. Tech heavyweights Nvidia, Alphabet and Meta surged overnight, and Palantir Technologies raised its revenue forecast for the second time this year on expectations of sustained demand for its artificial intelligence services. "Company earnings announcements continue to spur market moves," Moomoo Australia market strategist Michael McCarthy said in a note. In Japan, the S&P Global final services purchasing managers' index climbed to 53.6 in July from 51.7 in June, marking the strongest expansion since February. Oil prices were little changed after three days of declines on mounting oversupply concerns, with the potential for more Russian supply disruptions providing support. Brent crude futures were flat at $68.76 per barrel, while U.S. crude futures dipped 0.02% to $66.28 a barrel. Spot gold was slightly higher at $3,381.4 per ounce. [GOL/] The pan-region Euro Stoxx 50 futures were up 0.2%, while German DAX futures were up 0.3% and FTSE futures rose 0.4%. U.S. stock futures, the S&P 500 e-minis, were up 0.2%. Bitcoin was little changed at $114,866.06 after a two-day rally. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
