Wall Street Hits Record Highs Backed by Jobs Report
Rate-Cut Bets Rise Amid Strong Labor Market
Wall Street indices reached record highs following a U.S. jobs report that highlighted labor market stability,
boosting expectations for a Federal Reserve rate cut in December.
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Labor Market
Outlook
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The S&P 500 recorded its 57th all-time high of the year, climbing over 30% since the start of the year,
marking its largest annual gain since 2019.
In the bond market, short-term Treasuries—most sensitive to monetary policy changes—outperformed,
while 10-year Treasury yields fell to 4.15%. Meanwhile,
markets are pricing in a 20-basis-point rate cut in the upcoming Federal Reserve meeting.
Labor Market
The November jobs report showed an increase in employment with a slight uptick in the unemployment rate,
signaling a stable labor market.
Analysts noted that these figures provide reassurance to markets without indicating significant economic deterioration.
Investors, however, are now awaiting next week’s inflation report to assess whether the Federal Reserve will proceed with a rate cut.
Krishna Guha from Evercore emphasized that passing the inflation test will be the key determinant for future monetary policy decisions.
Outlook
With labor market stability and relatively contained inflation,
analysts believe the positive investment environment will support risky assets.
An HSBC report suggested that the S&P 500 could achieve further gains in 2025 despite high valuations.
However, experts caution that the current momentum could lead to an asset bubble,
particularly with the continued rise of stocks and cryptocurrencies.
Nonetheless, the overall sentiment remains optimistic,
as markets are expected to stay buoyed by strong economic growth and accommodative monetary policies.
Wall Street Hits Record Highs Backed by Jobs Report