Wall Street traders sent stocks higher as bonds yields fell after a string of weaker-than-estimated economic reports reinforced the case for the Federal Reserve to start cutting rates this year.
In a shortened session ahead of the U.S. holiday, the S&P 500 hit a fresh all-time high on bets Fed policy easing will keep fueling Corporate America.
Treasuries climbed as data showed the services sector contracted at the fastest pace in four years, private payrolls rose at a more moderate pace and continuing jobless claims increased for a ninth straight week.
"Bad news is good news," said Fawad Razaqzada at City Index and Forex.com. "That's how risk assets reacted in the aftermath of today's US data releases, which all came out weaker than expected."
Traders will get further insight into the state of the American labor market Friday. Economists anticipate a 190,000 gain in June nonfarm payrolls — a step-down from the previous month — with the unemployment rate holding at 4%.
The S&P 500 rose to around 5,535, notching its 33rd record in 2024. Tesla Inc. extended its rally into a seventh straight session, leading gains in megacaps — though Amazon.com Inc. fell. The stock market closed at 1 p.m. New York time, while the recommended close for Treasuries is 2 p.m. — when the Fed minutes will be released.
Treasury 10-year yields fell nine basis points to 4.34%. Swap traders are projecting almost two rate cuts in 2024, with the first in November — though bets on a September reduction increased. The dollar slipped.
"Clouds are developing in the macro picture, but the glass-half-full mindset of investors continues to drive markets higher," said Mark Hackett at Nationwide.
A survey conducted by 22V Research shows that 40% of investors think the market reaction to Friday's employment data will be negligible/mixed, 34% said "risk-on" and 26% "risk-off."
Source: 22V Research 
