Bond yields surge as it becomes glaringly evident the Fed won’t cut rates until September

The S&P 500 and Nasdaq Composite both smashed through to record highs on Thursday after new US employment data turned out stronger than Wall Street expected.

This came straight from the Bureau of Labor Statistics, which said 147,000 nonfarm jobs were added in June, well above the 110,000 that economists had predicted. It even beat May’s total, which was revised up to 144,000.

That unexpected jump in hiring sent stocks higher across the board. The Dow Jones Industrial Average moved up 381 points, or 0.9%, while the S&P 500 climbed 0.8% and the Nasdaq rose 1%.

The unemployment rate also dropped to 4.1%, while economists had expected it to rise to 4.3%. That decline, paired with the better hiring figures, completely flipped the narrative from the day before when ADP released a private sector report that said 33,000 jobs were lost in June, raising red flags about the health of the labor market.

Bond yields surge as it becomes glaringly evident the Fed won’t cut rates until September

The hiring surprise also hit the bond market. Treasury yields jumped, and traders began ditching their bets that the Federal Reserve would cut interest rates anytime soon.

Futures traders using the CME Group’s FedWatch tool now see a 95% chance that the Fed will leave rates unchanged at its July meeting. The market immediately priced in a longer hold on monetary policy, sending yields higher and erasing expectations of imminent easing.

There’s also political pressure brewing. Investors are closely watching President Donald Trump, who returned to the White House in January and is now pushing forward on several fronts. On Wednesday, Trump confirmed a new US-Vietnam trade agreement, and traders are bracing for more announcements.

His 90-day pause on tariffs ends next week, and everyone on Wall Street knows he’s eyeing the calendar. If he decides to tighten the trade screws, stocks could react quickly. Still, most investors seem to be leaning optimistic for now.

Ellerbroek said that even though tariffs will hit some businesses hard, “the market is going to digest that without too much trouble.” His view reflects a growing belief among traders that the economic data is strong enough to handle a little trade pain without falling apart.

Tax bill advances as markets close early

Beyond trade, Trump’s tax legislation is moving. The bill cleared the Senate on Tuesday and was sent back to the House, where Republicans advanced it again on Thursday. The measure is now waiting for a final vote, and if it passes, it could reshape the corporate tax landscape heading into the fall.

Despite all the noise, Thursday’s trading was short. Both the New York Stock Exchange and the Nasdaq closed at 1 p.m. Eastern Time, ahead of the Independence Day holiday on Friday, when US markets will remain closed.

Even with the shorter session, momentum stayed strong. The S&P 500 and Nasdaq Composite are both 1.5% higher for the week so far, and the Dow is up 2.1%. That strength isn’t just in the big indexes—it’s showing up in individual names, too. A total of 36 stocks in the S&P 500 hit new 52-week highs during Thursday’s session. Even more impressive, 25 of them reached fresh all-time highs.

Some of the most well-known companies joined that list. Royal Caribbean reached its highest price since going public in 1993. American Express broke through records going back to its 1977 IPO. Capital One, Goldman Sachs, JPMorgan, and Loews also made new highs, along with Morgan Stanley, Nasdaq Inc., CrowdStrike, Nvidia, and Oracle. These were the highest levels seen since those companies first went public, some of them decades ago.

And the rally wasn’t just for the big names. Smaller stocks got a lift too. The Russell 2000, which tracks smaller companies, rose 0.6% during Thursday morning trading. That was enough to push the index into positive territory for the year. Since its low point in April, the Russell has bounced back by almost 24%, showing that momentum is spreading across the whole market.

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