Record Highs for Stocks, Commodities Diverge, Fed Cut Bets Strengthen

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Index Update:  U.S. stocks closed higher, with the S&P 500 hitting a new record, as weak private payrolls and rising jobless claims reinforced expectations of a Fed rate cut this month. Broadcom jumped after reporting strong earnings, issuing upbeat guidance, and announcing $10 billion in AI chip orders.

Market Movers:  On Thursday, the top gainers were Concorde International Group Ltd (+97.96%), followed by Inno Holdings Inc. (+72.27%). On the contrary Neonode Inc. (-71.38%), and Artelo Biosciences, Inc. (-50.34%) declined the most the same day.

Commodities Update:  Brent and WTI crude oil futures extended losses, heading for a weekly decline as investors awaited the OPEC+ meeting on potential production hikes. Expectations of higher output to recapture market share from US shale producers, along with rising supply from independent drillers, fueled concerns of a global surplus. Bearish sentiment was further pressured by a rise in US crude inventories and signs of weaker demand amid slowing economic growth, the end of the summer driving season, and trade tariffs. Gold climbed near record levels and was on track for a strong weekly gain, supported by growing bets on US interest rate cuts and safe-haven demand. Softer labor market data has reinforced expectations of multiple rate cuts this year, while geopolitical tensions, trade risks, and concerns over Fed independence added to gold’s appeal as a defensive asset.

Macro Updates: US Payrolls Expected to Show Continued Labor Market Cooling

Nonfarm payrolls are projected to rise by 75K in August, in line with July’s gain and reflecting cautious hiring amid trade and policy uncertainties. Job losses are expected in manufacturing, partly due to a Boeing strike, and in federal employment from spending cuts. The unemployment rate is forecast to tick up to 4.3%, the highest since 2021, while wage growth is set to moderate, with annual earnings slowing to 3.7%.

Dollar Weakens Ahead of Jobs Report on Rising Fed Cut Bets

The dollar index fell to 98.1 as weak labor market data, including softer payroll growth, falling job openings, and higher jobless claims, reinforced expectations of a September Fed rate cut. Traders are now pricing in nearly full odds of a 25 bps move, while Fed officials’ warnings on labor market risks added to pressure, with the greenback sliding most against the New Zealand and Australian dollars.

Trump Targets Semiconductor Imports with New Tariff Threats

President Trump announced plans to impose tariffs on semiconductor firms that do not shift production to the U.S., while exempting those investing in domestic facilities. The move underscores his reliance on tariff threats to pressure partners, reshape supply chains, and advance his tech strategy, despite rising global trade tensions and uncertainty.

Bonds Commentary:  The 10-year US Treasury yield held near four-month lows as weak labor market data strengthened expectations of a Fed rate cut this month. Softer payroll growth, falling job openings, and higher jobless claims pushed markets to price in nearly full odds of a September 25 bps cut, with Fed officials also signaling support for policy easing.

Futures Update:  S&P and Nasdaq futures edged higher as signs of a cooling labor market boosted expectations of a Federal Reserve rate cut later this month. Investors awaited upcoming nonfarm payrolls data for clearer direction on employment trends. Positive corporate earnings also supported sentiment, with Broadcom, Samsara, and DocuSign rallying on strong results. The S&P 500 had recently closed at a record high, driven by labor data that reinforced rate cut bets.

Stocks moved significantly higher throughout Thursday's trading session, with major averages rebounding strongly after a lack of clear direction early on. The S&P 500 gained 53.82 points, or 0.83%, closing at 6,502.09. From a technical perspective, the index found support at key levels and steadily increased, indicating potential for further gains in the near future. Additionally, the 14-day RSI is nearing the midpoint, suggesting a possible upward trend. Key support levels are around 6,433, with resistance expected near 6,590.