Quick overview

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U.S. stocks reached all-time highs amid expectations that the Federal Reserve would lower interest rates to prevent a jobs downturn. Traders were also preparing for inflation data that could test the market’s confidence.

The index rose as all major tech companies, except Apple Inc., saw gains despite a decline in the majority of S&P 500 stocks. Apple experienced a significant 12.5 percent drop following the release of its iPhone 17, which featured a slimmer model as anticipated.

Two-year Treasury yields increased from their lowest levels since 2022, as a four-day rally was interrupted by a decline in bonds. Meanwhile, oil prices surged after an Israeli attack in Qatar raised concerns about escalating conflict in the Middle East.

Investors braced for important inflation data due in the coming days, especially after additional reports indicated a cooling labor market. These reports will help determine the extent of easing policies leading up to the end of 2025, as well as set the tone for the Federal Reserve’s meeting next week. Wall Street’s ability to maintain its gains from this month will likely hinge on this data. Money markets anticipate that the Fed will implement three rate cuts this year.

The Fed is likely to reduce rates by 25 basis points, unless there is a significant decrease in actual inflation, in which case a cut of 50 basis points may be considered. Markets believe that the August inflation report will be critical for discussions about the end of the Fed’s cutting cycle rather than its continuation.

Government data indicated that U.S. job growth for the year ending in March was significantly weaker than previously thought. The preliminary benchmark revision released on Tuesday suggests that payroll numbers may be revised down by a record 911,000, or 0.6 percent, with final numbers expected early next year.

Jamie Dimon commented, “The record revision to U.S. payroll data is further evidence that the U.S. economy is struggling with a slowdown.” The Chief Executive Officer of JPMorgan Chase & Co. expressed concerns in a Tuesday interview with CNBC about whether the economy is headed for a recession or facing different challenges.