Weaker-than-expected July jobs data boosted investor confidence the Fed may pause rate hikes in September.
AI-related stocks surged this week, driving the Dow Jones Industrial Average and S&P 500 to record highs. The Dow closed up 3%, while the Nasdaq Composite gained 5.2%, narrowing its gap to its June peak to 1.5%. The S&P 500 also finished at a record on Friday.
The rally followed a weaker-than-expected July jobs report, which showed nonfarm payrolls falling by 23,000. This eased concerns over further Federal Reserve rate hikes, pushing Treasury yields lower. Traders now see a 55% chance the Fed holds rates steady in September, up from 45% a day earlier.
Semiconductor and data center stocks led the rebound after a volatile July, recovering from last week’s hedge fund collapse. The AI sector’s recovery accelerated as investors reassessed growth prospects amid shifting monetary policy expectations.