US stocks set another record and yields leap on signals the US economy
is solid
[July 05, 2025] By
STAN CHOE
NEW YORK (AP) — U.S. stocks climbed further into record heights on
Thursday after a report showed the U.S. job market looks stronger than
Wall Street expected.
The S&P 500 rose 0.8% and set an all-time high for the fourth time in
five days. The Dow Jones Industrial Average added 344 points, or 0.8%,
and the Nasdaq composite gained 1%.
The market’s gains were widespread, and companies whose profits can get
the biggest boosts when workers are feeling confident helped lead the
way. Expedia climbed 3.2%, and Norwegian Cruise Line steamed 2.9%
higher.
Bank stocks were also strong, with Citigroup up 2.3%, and JPMorgan Chase
up 1.9%.
The reaction was bigger in the bond market following the report from the
U.S. government, which said employers added 147,000 more jobs to their
payrolls last month than they cut. The unexpected acceleration in hiring
signals the U.S. job market is holding up despite worries about how
President Donald Trump’s tariffs may hurt the economy and inflation.
“There is nothing to complain about here,” according to Carl Weinberg,
chief economist at High Frequency Economics. “You cannot find any
evidence of a nascent recession in these figures.”
A separate report, meanwhile, said fewer U.S. workers applied for
unemployment benefits last week, an indication of easing layoffs.
Yields jumped in the bond market as investors bet the
better-than-expected data could keep the Federal Reserve on hold when it
comes to interest rates, instead of cutting them like Trump has loudly
been calling for.
Traders in the futures market now see less than a 5% chance that the Fed
could cut its main interest rate at its next meeting later this month.
That’s down sharply from the nearly 24% chance they saw just a day
earlier, according to data from CME Group.
The Fed’s chair, Jerome Powell, has been insisting that he wants to wait
and see how Trump’s tariffs affect the economy and inflation before
making its next move. While lower rates give a boost to the economy by
making it easier to borrow money, they can also give inflation more
fuel. And that could be dangerous if Trump’s tariffs are about to send
inflation higher.
Many of Trump’s stiff proposed taxes on imports are currently on pause,
but they’re scheduled to kick in next week unless Trump reaches deals
with other countries to lower them.
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Trader Neil Catania works on the floor of the New York Stock
Exchange, Tuesday, July 1, 2025. (AP Photo/Richard Drew)
 Many U.S. companies in the services
industries are still saying they’re concerned about the impacts of
tariffs, even if they returned to growth last month following May’s
contraction, according to the most recent survey by the Institute
for Supply Management.
“Increased cost from tariffs and the potential for
tariffs is impacting cost increases,” one company in the
agriculture, forestry, fishing and hunting industry said in the
survey.
The yield on the 10-year Treasury rose to 4.34% from 4.30% late
Wednesday. The two-year Treasury yield, which moves more closely
with expectations for the Fed, jumped even more. It climbed to 3.88%
from 3.78%.
On Wall Street, Datadog rallied 14.9% after learning that its stock
will join the widely followed S&P 500 index before trading begins on
Wednesday. Many managers of funds either directly mimic or at least
compare themselves against the S&P 500, which drives investment into
any stock that joins the index.
Datadog will replace Juniper Networks, which combined with Hewlett
Packard Enterprise in a merger.
On the losing side of Wall Street were companies that can feel pain
from interest rates staying high.
Homebuilders would like rates to fall in order to make mortgages
cheaper to get, for example, and Lennar sank 4.1%, while D.R. Horton
dropped 2.7%.
All told, the S&P 500 rose 51.93 points to 6,279.35. The Dow Jones
Industrial Average added 344.11 to 44,828.53, and the Nasdaq
composite climbed 207.97 to 20,601.10.
In stock markets abroad, indexes rose across much of Europe and
Asia. South Korea’s Kospi climbed 1.3%, and Hong Kong’s Hang Seng
fell 0.6% for two of the bigger moves.
___
AP Writers Teresa Cerojano and Matt Ott contributed.
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