U.S. equities pulled back Thursday as investors responded to a more cautious Federal Reserve and stronger-than-expected private jobs data. While Fed Chair Jerome Powell dialed back expectations for a September rate cut, strategists remained broadly optimistic—highlighted by Wells Fargo’s upward revision of the S&P 500 year-end target.
Powell Remarks Cool Rate Cut Momentum
Markets opened lower after Powell signaled reduced confidence in the need for a September rate cut. Speaking after the Fed left interest rates unchanged, Powell emphasized that recent inflation data showed limited progress, while two committee members dissented in favor of an immediate cut.
As a result, the implied probability of a September rate reduction fell from 68% to under 50%, according to CME FedWatch. Treasury yields rose slightly, and tech stocks, which are most sensitive to rate expectations, led declines.
Wells Fargo Sees 6,500 S&P Target
In contrast to the market’s cautious tone, Wells Fargo raised its year-end forecast for the S&P 500 to 6,300–6,500, citing three key factors:
- Delayed tariffs, easing pressure on corporate margins
- Robust earnings, especially in tech and energy
- Favorable fiscal policy changes, including infrastructure stimulus and tax reform discussions
The firm joins a growing list of bullish Wall Street strategists who see upside despite short-term Fed uncertainty.
ADP Jobs Surprise to the Upside
In labor news, the ADP National Employment Report showed that 104,000 private-sector jobs were added in July, above consensus estimates of 90,000.
While the figure suggests resilience in the labor market, economists noted continued cooling in wage growth and a slight uptick in job-switching rates. The data may complicate the Fed’s policy path by dampening the urgency for rate relief.
Market Snapshot
- S&P 500: –0.42%
- Nasdaq Composite: –0.67%
- 10-Year Treasury Yield: ↑ to 4.33%
- U.S. Dollar Index: Slightly firmer
- Gold: +0.2% as hedging demand picks up
Investor Outlook
Markets remain in flux as conflicting signals emerge: cautious central banks, optimistic forecasts, and mixed labor data. The next big catalyst will be Friday’s U.S. nonfarm payrolls and earnings from Apple and Amazon, which could further shape rate cut expectations into Q3.
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