U.S. equity markets saw a rebound today, led by a strong rally in tech stocks as the Nasdaq Composite recovered from recent losses. The bounce came despite a weaker-than-expected ADP private payroll report, which revealed a slowdown in job creation during June. Surprisingly, investors viewed the soft labor data as a signal that the Federal Reserve may adopt a more cautious approach to future interest rate hikes.

The combination of slowing employment growth and rising optimism around monetary policy stability drove risk appetite back into equities — particularly in growth and tech names.

Nasdaq Leads the Recovery: Tech Stocks Regain Strength

The Nasdaq Composite Index rose 1.8% during the day, supported by gains in major components such as:

• Nvidia (NVDA): +2.4%

• Apple (AAPL): +1.7%

• Tesla (TSLA): +3.2%

• Meta Platforms (META): +2.1%

The S&P 500 climbed 0.9%, while the Dow Jones Industrial Average posted a more modest 0.4% gain.

Investors appeared eager to re-enter high-growth sectors after recent volatility, encouraged by the belief that weaker jobs data could pause the Fed’s tightening cycle.

ADP Jobs Report: Slower Growth Than Expected

The June ADP Employment Change report revealed that U.S. private employers added 140,000 jobs, missing consensus estimates of 195,000. Key details:

• Services sector hiring dropped to its lowest pace since late 2023

• Wage growth remained stable but showed signs of plateauing

• Manufacturing employment contracted slightly for the second consecutive month

Markets interpreted the report as a sign that the labor market is cooling at a sustainable pace, rather than collapsing — providing room for the Federal Reserve to remain on hold.

Fed Watch: What Slower Jobs Data Means for Interest Rates

Traders have now revised expectations for the Fed’s next move:

• Fed Funds Futures are pricing in a 67% chance that the Fed will hold rates steady at the upcoming July meeting

• A rate cut in September is now viewed as more likely than before

• Yields on 10-year Treasuries fell 6 basis points to 3.71% in response to the report

Lower rates typically benefit growth and tech stocks, helping explain the Nasdaq’s outperformance.

Sector Highlights

• Technology: Benefited from declining bond yields and improved risk sentiment

• Consumer Discretionary: Rose 1.3% on expectations that a softer labor market could keep inflation in check

• Financials: Lagged the broader market as falling rates pressure profit margins

• Energy: Mixed performance, tracking sideways oil prices as investors await the OPEC+ decision

Macro Outlook: What Investors Should Watch Next

Key data and events to monitor in the coming days:

• July 5: Non-farm payrolls report (more comprehensive labor market data)

• July 10: U.S. CPI inflation report

• July 31: Next FOMC policy decision

• Ongoing developments in U.S.–China trade talks and Q2 earnings season

Volatility may remain elevated as markets attempt to forecast both economic resilience and central bank behavior in a fragile macro environment.

Conclusion

Despite a softer-than-expected ADP report, U.S. equity markets — and the Nasdaq Composite in particular — staged a strong rebound on the belief that a cooling labor market could slow the Fed’s tightening path. As the focus shifts to the official jobs report and July’s inflation data, traders are positioning for a data-dependent but potentially dovish Fed.

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