S&P 500, Nasdaq hit record highs as jobs data strengthens rate cut bets

The S&P 500 and the Nasdaq hit new intra-day record highs on Friday after data showing a rise in the unemployment rate and moderation in wage gains bolstered expectations that the Fed could begin cutting interest rates by the middle of this year.

U.S. job growth accelerated in February, with nonfarm payrolls increasing by 275,000 jobs against an expected 200,000 rise. Data for January, however, was revised lower to show that 229,000 jobs were created.

The unemployment rate rose to 3.9% in February after holding at 3.7% for three straight months, while wage growth slowed to 0.1% on a monthly basis.

“At the end of the day this was a pretty dovish print because we had slower wage gains,” said Cameron Dawson, chief investment officer of NewEdge Wealth in New York.

“As of right now, the labor market is tight and healthy. However, it’s not as hot as it was, which takes some of the inflation pressure off.”

Traders now see an 81.1% chance of the Federal Reserve cutting interest rates in June, compared with 74.4% before Friday’s data, according to CME’s FedWatch Tool.

AI darling Nvidia hit a record high, rising 3.0% and outperforming megacap growth and technology peers. Rivals Advanced Micro Devices and Micron Technology rose about 2% each.

Among the 11 major S&P 500 sectors, consumer staples was the biggest loser.

At 09:37 a.m. ET, the Dow Jones Industrial Average was up 8.98 points, or 0.02%, at 38,800.33, the S&P 500 was up 9.57 points, or 0.19%, at 5,166.93, and the Nasdaq Composite was up 55.76 points, or 0.34%, at 16,329.14.

The benchmark S&P 500 index closed at a record high on Thursday after Fed Chair Jerome Powell said the central bank was “not far” from gaining the confidence that inflation is falling sufficiently to begin cutting interest rates.

Focus now shifts to consumer prices (CPI) data due next week for more cues on potential rate cuts.

Broadcom slipped 2.9% after the tech company’s full-year forecast failed to impress investors.

Shares of Marvell Technology shed 6.7% after it forecast first-quarter results below market expectations on soft demand in its wireless infrastructure, consumer and enterprise markets.

Gap climbed 4.4% after the retailer beat Wall Street expectations for fourth-quarter results, buoyed by strong demand on improved product offerings at its Old Navy and namesake brands during the holiday season, and lower markdowns.

Costco Wholesale eased 5.5% as quarterly sales fell short of estimates due to tepid demand for higher-margin goods.

Advancing issues outnumbered decliners by a 3.86-to-1 ratio on the NYSE and by a 3.26-to-1 ratio on the Nasdaq.

The S&P index recorded 36 new 52-week highs and no new lows, while the Nasdaq recorded 57 new highs and 15 new lows.