U.S. Stocks Edge Higher Amid Recovery Attempts

U.S. stocks edged higher on Monday as investors started the week positively after last week’s sharp sell-off due to weak jobs data and tariff concerns.

Summary

• Stocks rose as investors became optimistic following the sharp sell-off seen on August 1.
• Dow added 300 points, while S&P 500 and Nasdaq increased by 0.8% and 0.95%, respectively.
• Concerns around global trade and the U.S. economy remain.

The Dow Jones Industrial Average rose nearly 300 points, with the S&P 500 and Nasdaq also posting gains. The slight recovery came after equities faced significant pressure on August 1, primarily driven by disappointing U.S. labor data and tariff announcements from President Trump.

Wall Street Sell-off Worst in Months

The S&P 500 index, which had maintained record highs throughout July, started August poorly, experiencing a drop of over 2%, marking its worst day since late May. Likewise, the Dow fell more than 500 points, experiencing its worst week since early April, while the Nasdaq faced a 2.4% drop on Friday.

The declines in stocks also impacted the cryptocurrency market, with Bitcoin (BTC) falling below $114k.

Weak Jobs Data Catalyzed Losses

The sell-off on August 1 followed the release of July’s U.S. monthly jobs report, which was weaker than expected. The disappointing figures, compounded by downward revisions of previous months, led investors to fear that the U.S. labor market might be weaker than anticipated.

In response to the negative data, President Trump dismissed Bureau of Labor Statistics commissioner Erika McEntafer, with reports indicating that a new commissioner could be announced this week.

Tariffs and Earnings Focus

Investors continue to monitor the U.S. economy and the Federal Reserve’s stance amid global trade tensions. Although the Fed kept interest rates unchanged in July, there are high expectations (90%) for a possible rate cut in September.

Jeremy Siegel, a finance professor at the University of Pennsylvania’s Wharton School, suggested that a rate cut might have occurred in July had the weak jobs data been available at that time.

Meanwhile, attention on tariffs is heightened with the upcoming enforcement date of August 8, following President Trump’s imposition of steep tariffs on several countries. Ongoing U.S.-China trade talks are also under scrutiny.

This week will see several companies, including Palantir and Disney, release their quarterly earnings reports as earnings season continues.