Wall Street Markets Rally on Data and Trade Support: U.S. stock indices closed significantly higher,
reaching their highest levels since February.
Supported by better-than-expected jobs data and renewed optimism
over progress in trade talks between the United States and China.
Treasury yields rose, the U.S. dollar gained, and cryptocurrencies saw profits,
as markets scaled back their bets on the pace of interest rate cuts expected from the Federal Reserve.

Contents
Broad Gains in Equities

U.S. Jobs Data

Trump

Markets Reprice Rate Cuts

Market Outlook

Survey

Broad Gains Led by Tesla and Growth-Sensitive Sectors

The S&P 500 index rose by 1%, surpassing the 6,000-point threshold,
supported by strong performance in economically sensitive sectors.
Tesla shares topped the gainers, climbing 3.8%, leading the rally among major companies.

At the same time, two-year Treasury yields rose above 4%,
while yields in other parts of the curve declined,
reflecting a shift in investors’ expectations regarding Fed monetary policy.

U.S. Jobs Data Boosts Sentiment

Despite a slowdown in job growth during May and downward revisions to previous months’ data,
the jobs report slightly beat expectations,
boosting market confidence that had been bracing for negative surprises.
Non-farm payrolls increased by 139,000 jobs,
while the unemployment rate held steady at 4.2%, and wage growth accelerated.

Brett Kenwell from eToro stated: “The economy may not be operating at full strength,
but it’s far from collapse,” adding that the strong data gives the Fed more time,
even as disinflation continues to challenge tight policy justification.

Trump Renews Pressure on the Fed

Following the data release, President Donald Trump renewed his pressure on the Federal Reserve,
calling for a full 1% rate cut,
and criticised what he called the Fed’s “catastrophic delay” compared to the European Central Bank.

Trump wrote on social media: “The Fed’s severe delay is catastrophic!
Europe cut rates 10 times, and we got none… Go for a full point—rocket speed!”

Markets Reprice Rate Cut Expectations

Swap contracts showed that markets have reduced their expectations for two rate cuts this year.
The probability of a quarter-point cut in September now stands at 70%,
down from 90% a day earlier. Markets are no longer fully pricing in more than one or two cuts for 2025.

Chris Zaccarelli from Northlight Asset Management said,
“The Fed must be cautious.
Most of the tariff effects have yet to show in inflation,
and the labour market hasn’t weakened enough to justify a major rate cut.”

He added that market valuations remain elevated and trade risks persist, which calls for a more conservative stance.

Market Outlook: Hopes for a Trade Breakthrough

Despite ongoing uncertainty surrounding tariffs, Glenn Smith of JDS Wealth Management
believes that markets have already started pricing in a potential trade breakthrough.

“We wouldn’t be surprised if the S&P 500 breaks past its previous February high,
especially if conditions improve over the summer.”

Survey: S&P 500 Projected to Reach 6,500 Points

In a Bloomberg poll conducted during an economic panel,
44% of respondents expected the S&P 500 to reach 6,500 points before the end of 2025,
while 26% expected it in the first half of next year, and 11% in the second half.

Mark Hackett from Nationwide said:

“Markets are enjoying a long-awaited breather after two months of volatility.
The slight improvement in earnings forecasts and stability in corporate guidance
could push the market toward new record highs.”

Wall Street Markets Rally on Data and Trade Support

Wall Street Markets Rally on Data and Trade Support

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