S&P 500, Nasdaq climb on weaker jobs data

U.S. stocks rose Thursday as investors digested weaker-than-expected labor market data that could help shape expectations about interest rate cut hopes and the health of the U.S. economy.

The S&P 500 (GSPC) rose 0.4%, while the Dow Jones Industrial Average (DJI) was flat. The tech-heavy Nasdaq Composite (IXIC) rose 1%, amid swings across all three benchmarks. The indices ended Wednesday’s volatile session in mixed order, as their start to September continued to deteriorate.

U.S. private employers reported their weakest monthly hiring growth since January 2021, according to new data released Thursday by ADP. Private-sector payrolls rose by about 99,000, well below expectations. Meanwhile, slightly fewer Americans filed new unemployment claims last week. On Wednesday, government data showed that job openings fell.

Together, the labor market data serve as an appetizer for Friday’s August jobs report, crucial to the Fed’s policy decision-making and closely watched for hopes of a “Goldilocks” economy.

Stock markets are on a rollercoaster ride, with the market torn between conflicting impulses and data releases painting a downbeat picture of the economy. The recent weak data suggests deeper rate cuts are needed. But they could also be a sign that the U.S. is on the brink of recession and a “soft landing” is no longer on the cards.

Traders now estimate there is a nearly 50% chance the Federal Reserve will cut rates by 0.5% at its September meeting.

On the enterprise side, earnings from HPE (HPE) and C3.ai (AI) shed light on AI growth prospects. Shares of C3.ai fell 20% after the enterprise AI software maker posted weak subscription revenue. HPE stock fell on disappointment over its profitability.