Wall Street benchmarks rallied on Wednesday, boosted to fresh record highs by renewed optimism that the Federal Reserve will lower interest rates as early as this month after economic data releases that were weaker than analysts predicted. U.S. non-farm payroll jobs rose by 102,000 in June, Moody’s Analytics reported, less than the expected increase of 135,000 jobs.
The Dow Jones Industrial Average rallied to a 0.67 percent close, while the S&P 500 ended 0.77 percent higher and the NASDAQ ended up 0.75 percent. U.S. markets closed early on Wednesday and will be closed on Thursday in celebration of Independence Day.
Despite the joy that often surrounds a market rally, analysts are concerned about some of the concerning patterns that are brewing beneath the market’s surface. For starters, government bond yields are continuing to decline despite the recent rally, a sign that the market is preparing itself for a rough patch in the future.
On Wednesday, the Dow Jones Industrial Average hit its first record since October 2018 and ended its longest period without a record in four years – 188 sessions without a record, to be exact. Though the victory may be sweet, the question of why this record-less period lasted so long is a good one and underscores the possibility of weakness in the markets.
With central banks around the world embracing monetary easing policies, it stands to reason that the U.S. Federal Reserve will not be far behind. U.S. President Donald Trump has long been pushing for an interest rate cut, though Federal Reserve Chairman Jerome Powell has long maintained that policy will be dictated by necessity, not by presidential (or any other) pressure.
Asian benchmarks were broadly higher on Thursday on the heels of Wednesday’s Wall Street gains. Japan’s Nikkei 225 was up 0.27 percent as of 10:16 a.m. HK/SIN, and Hong Kong’s Hang Seng Index was up 0.25 percent. Australia’s ASX gained 0.56 percent in the early part of the day. South Korea’s Kospi bucked the trend, trading down a modest 0.06 percent after starting the session higher.