The US stock market experienced broad gains as a significant slowdown in the labor market fueled speculation that the Federal Reserve may not need to raise interest rates in the near term. This sentiment propelled the Dow Jones Industrial Average to a 1.1% gain, reaching a new all-time high.
While bets on the Fed's interest rate outlook boosted the vast majority of S&P 500 components, the index closed essentially flat, weighed down by a decline in chip stocks.
Hiring in the United States slowed sharply in June, dampening the momentum that job growth had only recently begun to show this year.
"Just when investors thought they had a handle on the labor market, the June jobs report threw a curveball," said eToro analyst Bret Kenwell. "A weak jobs report isn't exactly good news, but it might offer a glimmer of hope for risk assets by easing the pressure on the Fed to take a more hawkish stance."
"The labor market is still expanding, but it's no longer overheating, which allows the Fed to be patient as it assesses inflation pressures," said Andrew Dubinsky of UBS's Chief Investment Office. "If inflation continues to retreat as expected, policymakers have little reason to break from their current wait-and-see stance in the second half of the year."
Technology stock volatility intensified ahead of the US holiday, with the Philadelphia Semiconductor Index falling for a second consecutive day, bringing its two-day decline to 11%.
Wall Street is growing increasingly concerned about the outlook following the sector's massive rally, questioning whether massive investments in artificial intelligence will yield corresponding returns.
"Investors are facing a constant stream of questions," said strategists at Bespoke Investment Group. "We can all make our best guesses, but only time will provide the answers. As the situation unfolds, the market will continue to react through price movements."
At the close, the S&P 500 was essentially unchanged at 7,483.24 points.
The Dow Jones Industrial Average rose 1.1% to 52,900.07 points.
The Nasdaq Composite Index fell 0.8% to 25,832.67 points.
The Nasdaq 100 Index dropped 1.6% to 29,329.21 points.
The Russell 2000 Index declined 0.5% to 2,996.11 points.
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