(Reuters) – The main U.S. stock indexes advanced on Monday, recovering from the prior session’s sharp decline as anticipation grew for more significant interest rate reductions from the Federal Reserve following a surprisingly soft jobs report.
In early trading at 9:33 a.m., the Dow Jones Industrial Average was up 301.22 points, or 0.69%, at 43,889.80. The S&P 500 added 48.91 points, or 0.78%, to reach 6,286.21, and the Nasdaq Composite climbed 205.12 points, or 0.99%, to 20,855.25.
A disappointing U.S. employment report on Friday pressured the S&P 500, causing the index to suffer its most severe intraday fall in over two months. Downward revisions for employment figures in May and June further amplified the negative sentiment.
The gloomy data not only sparked a market downturn but also prompted a substantial recalibration of the Fed’s anticipated interest rate path.
Traders, who were previously anticipating another rate hold in September, now assign an 85% probability to a rate cut, as evidence of a cooling labor market accumulates. By year-end, market participants are forecasting at least two cuts of a quarter-point each—a prospect that ultimately provided a floor for Wall Street. The CBOE Volatility Index, often called Wall Street’s “fear gauge,” declined to 18.45 points after spiking to a more than one-month high during Friday’s sell-off.
Investors were also processing the surprise departure of Fed Governor Adriana Kugler, a move that could provide President Donald Trump an earlier opportunity to influence the central bank’s leadership. Trump, a frequent and sharp critic of the Fed’s policies, has often stated his intent to replace Chair Jerome Powell.
“If we get to a point where Jerome Powell was pushed out earlier than he’s expected to go anywhere, that is going to unsettle markets, and that is possibly the pill that they won’t swallow,” remarked Danni Hewson, head of financial analysis at AJ Bell.
In company news, shares of Tesla (NASDAQ:TSLA) advanced 2.6% after the company awarded CEO Elon Musk 96 million shares valued at approximately $29 billion.
All sub-sectors of the S&P 500 were trading in positive territory, with the technology sector leading the gains, up 1.1%.
Lyft (NASDAQ:LYFT) shares climbed 2.9% following a new partnership with China’s Baidu (NASDAQ:BIDU) to launch robotaxi services across Europe starting next year.
Looking ahead, U.S. factory orders data for June is scheduled for release at 10:00 a.m. ET. This week’s economic calendar is relatively light, with a report on business activity on Tuesday and jobless claims figures on Thursday being the other key releases.
Following a major week for Big Tech earnings, reports are expected from companies across different industries, including Palantir (NASDAQ:PLTR), Eli Lilly (NYSE:LLY), and Disney (NYSE:DIS).
As of Friday, of the 330 S&P 500 companies that have reported their quarterly results, 80.6% have exceeded analyst forecasts, marking the strongest beat rate since the third quarter of 2023, based on LSEG I/B/E/S data.
Among stocks moving in early trade, Joby Aviation (NYSE:JOBY) surged 17.5% on a Bloomberg News report that the company is considering the acquisition of helicopter ride-share firm Blade Air Mobility. Shares of Blade Air soared 25.4%.
Spotify (NYSE:SPOT) added 7.6% after the music streaming service announced its intention to increase the monthly price for its premium individual plan in certain markets beginning in September.
On the market breadth front, advancing stocks outpaced decliners by a 3.77-to-1 margin on the NYSE and by a 3.02-to-1 margin on the Nasdaq.
The S&P 500 recorded five new 52-week highs and no new lows, while the Nasdaq Composite registered 29 new highs and 26 new lows.
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