Overnight – Rate cut hopes strengthen as 880,000 jobs “disappear”

Stocks edged higher overnight, supported by positive earnings reports and a cautious tone from the Federal Reserve’s July meeting minutes.

Investors remained optimistic despite softer labour market data, as the Fed minutes suggested that a rate cut could be on the horizon, with a “vast majority” of policymakers signaling that a reduction in rates may be appropriate if inflation continues to progress as expected.

A significant revision to U.S. payroll data came from the Bureau of Labor Statistics, with the amount of jobs “added” since march, reduced by 880k or 30%, strengthening the argument for rate cuts. The market is trading cautiously ahead of the final report and the upcoming speech by Fed Chair Jerome Powell at the Jackson Hole symposium.

In company specific news Target’s stock soared over 15% after the company reported stronger-than-expected earnings for the second quarter, driven by rising same-store sales. In contrast, Macy’s and La-Z-Boy saw their stocks slump after reporting weaker-than-expected quarterly revenues, reflecting ongoing challenges in U.S. consumer spending on non-essential goods. Macy’s stock, in particular, dropped 13%, highlighting the retail sector’s mixed performance amid fluctuating consumer demand.