Stock Market Rebounds on Strong Corporate Earnings and Rate Cut Optimism: Aug. 4, 2025 

Stocks are recovering strongly with all major US benchmarks advancing by more than 1% as investors dive in and buy the dip. What’s motivating the rebound are robust corporate earnings results as a majority of firms are beating analyst expectations. And what’s also propelling enthusiasm is an 83% probability that the Fed will resume its easing cycle next month, following an awful nonfarm payrolls report which featured heavy downward revisions. Indeed, the print even led to President Trump dismissing BLS Commissioner Erika McEntarfer due to his belief that the numbers were manipulated. Still, traders are prioritizing rate reductions over economic health and are betting that weak hiring will be helped by monetary policy accommodation, like it did last summer. Meanwhile, Treasuries face additional tests this week with auctions for 3- and 10-year notes on Tuesday and Wednesday followed by a 30-bond offering on Thursday which total a sum of $125 billion. For now though, we’re seeing limited action across the yield curve, but every sector of equities is gaining, alongside the greenback and the silver and gold metals. Additionally, forecast contracts and bitcoins are catching bids. Conversely, cyclical commodities are facing selling pressure while participants unwind their hedges with the prices of volatility protection instruments declining. 

Equities Aren’t Worried About a Slowdown

Last week’s heavy revisions to hiring brought the 3-month average of job gains of 35,000, a level consistent with recessionary conditions. Indeed, in modern times, payrolls below 100,000 raise eyebrows in the economist community. But this restructuring of global trade has been historic and effectively led to corporate executives hesitating to make meaningful payroll expansions. This kind of behavior makes sense, with so many changes on the horizon and significant shifts taking place, firms have slowed down their pace of roster additions to a stall. Meanwhile, the Trump policy mix carries a binary perception, with many believing that the measures are going to deliver an economic boom while others think that it will sink the nation into a slowdown. The incoming batch of economic data will provide clues on which direction we’re going, but for now, the equity market has voted loud and clear and investors are enthusiastic about profit momentum going forward which is directly linked to the rate of GDP advancement. Time will tell.