US Jobs Boom Propels Stocks to Record Highs

People celebrating on Wall Street.

US stock markets soared to new record highs in early July 2025, propelled by stronger-than-expected jobs data. The S&P 500 and Nasdaq Composite closed at unprecedented levels, with the Dow Jones Industrial Average also seeing significant gains. This surge came despite initial concerns about a weakening labor market and ongoing geopolitical tensions.

Market Soars on Robust Jobs Report

The U.S. Labor Department’s report on Thursday, July 3, 2025, revealed that nonfarm payrolls increased by 147,000 jobs in June. This figure significantly surpassed the Reuters poll estimate of 110,000 and was an upward revision from May’s 144,000 advance. The strong jobs data alleviated fears of a rapidly deteriorating labor market, fueling investor optimism.

  • S&P 500: Rose 0.83% to 6,279.35 (record high)
  • Nasdaq Composite: Rose 1.02% to 20,601.10 (record high)
  • Dow Jones Industrial Average: Rose 0.77% to 44,828.53

Federal Reserve Rate Cut Expectations Shift

The robust jobs report led to a significant recalibration of expectations for Federal Reserve interest rate cuts. Prior to the data release, there was a nearly 98% chance of a September rate cut, which has now fallen to approximately 75%. The possibility of a July rate cut has been all but eliminated.

Key Economic Indicators and Market Drivers

Beyond the jobs report, several other factors influenced market performance:

  • ISM Services PMI: The Institute for Supply Management (ISM) reported that U.S. services sector activity picked up in June, with orders rebounding, although employment contracted for the third time this year.
  • Corporate Earnings: The second-quarter U.S. corporate earnings season is set to begin, with S&P 500 earnings expected to climb 5.9% from a year earlier.
  • Political Developments: Investors are closely watching the progress of former President Donald Trump’s "One Big Beautiful Bill," a sweeping tax-cut and spending bill, which is awaiting a vote in the House.
  • Trade Deals: Optimism surrounding potential trade deals, including a tariff-slashing agreement with Vietnam, contributed to positive market sentiment.

Sectoral Performance and Notable Movers

Technology stocks were a significant driver of the market’s gains, with Nvidia’s shares rising 1.3% and approaching a $4 trillion market capitalization. Other notable movers included:

  • Tesla (TSLA): Surged nearly 6% after beating Q2 delivery estimates.
  • Banks: JPMorgan, Wells Fargo, Citigroup, and Goldman Sachs saw increases following dividend announcements post-Fed stress test results.
  • Healthcare Sector: Dragged down the market, with managed care stocks like Centene (CNC) experiencing sharp declines after withdrawing its 2025 outlook.

Looking Ahead

With U.S. markets closing early on Thursday, July 3, and remaining closed on Friday, July 4, for Independence Day, investors will resume trading on Monday, July 7. The focus will remain on upcoming economic data, corporate earnings, and any further developments regarding fiscal policy and trade.

Sources