Dow Jones Surges 250 Points as Weak ADP Jobs Data Boosts Fed Rate Cut Hopes

The Dow Jones Industrial Average (DJIA) jumped more than 250 points on Thursday, lifted by weak U.S. labor data. Investors now expect the Federal Reserve (Fed) to cut interest rates on September 17, sending equities higher.

Key Takeaways

• Dow Jones up 250+ points after soft ADP jobs report.
• Markets now price in a Fed rate cut in September.
• ISM Services PMI rose for the third month in a row.
• Focus shifts to Friday’s Nonfarm Payrolls (NFP) report.

Weak ADP Jobs Data Fuels Rally

The ADP Employment Change report showed only 54,000 jobs added in August. This was below the expected 65,000 and far weaker than July’s 106,000.

At the same time, jobless claims rose to 237,000, slightly above forecasts. These signs of a cooling labor market increased expectations of a Fed rate cut.

The Dow Jones is still slightly lower for the week, but the index is closing in on 45,600. A break above 45,760 would mark a new all-time high.

PMI Data Supports Bulls

The ISM Services PMI climbed to 52.0 in August, expanding for a third month. Businesses reported steady demand and optimism, though delivery bottlenecks remain.

However, warning signs are emerging:

• Inventories expanded for the 28th straight month, hinting at overstocking.
• Backlog of orders fell to the lowest level since 2009, signaling weaker demand ahead.

Eyes on Nonfarm Payrolls

Markets now await the August Nonfarm Payrolls (NFP), due Friday. Economists expect 75,000 new jobs, slightly above July’s 73,000.

If the report confirms labor market weakness, it will likely lock in a 25 basis-point Fed rate cut in September. That could push the Dow Jones toward fresh record highs.

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