Weaker-than-expected June payrolls data reduced Fed rate hike bets, lifting equities despite mixed session closes.
The S&P 500 closed the week with gains, driven by strength in financials and communication services sectors. The index finished flat on Thursday, while the Dow rose 1.1%, as softer June non-farm payrolls data eased expectations for Federal Reserve interest rate hikes.
Prior to the report, markets had priced in a higher probability of a July rate increase. The payrolls miss, however, shifted sentiment, with traders now anticipating a more cautious Fed stance. Year-to-date, the S&P 500 has advanced 15%, supported by resilient corporate earnings and cooling inflation pressures.
Equities showed muted reaction to the data, with sector rotation favoring rate-sensitive groups. Treasury yields dipped briefly before stabilizing, reflecting tempered rate hike expectations.