Stocks flat after open as cooling jobs data keep Fed rate-cut bets alive

Wall Street shuffled sideways in the first hours of Thursday’s session, with the S&P 500 and Nasdaq a touch higher and the Dow slightly lower as investors weighed cooling labor-market data against the prospect of near-term Federal Reserve rate cuts. The tone felt like a holding pattern: enough softness in hiring and jobless claims to nudge Treasury yields lower and support growth multiples, but not enough clarity to drive a decisive rotation before Friday’s nonfarm payrolls.
The day’s setup hinged on three moving parts. First, the latest private-payrolls reading undershot expectations, reinforcing a trend of slower hiring into late summer. Second, initial jobless claims ticked higher, adding to evidence that labor turnover is normalizing from 2024’s heat. Third, services activity remains in expansion, implying the economy is bending rather than breaking. Put together, the data keep rate-cut odds elevated while leaving investors to debate whether easing will arrive with a soft landing—or as insurance against a tougher slowdown.
Stock-specific action showed how sensitive leadership is to guidance quality. Salesforce (CRM) dropped after a cautious revenue outlook overshadowed solid execution, reviving the market’s insistence that AI monetization show up in near-term cash flows. That caution bled into enterprise software more broadly and helped cap megacap enthusiasm. At the other extreme, American Eagle Outfitters (AEO) ripped higher after a clean beat-and-raise, crediting marketing momentum and disciplined inventory; the move telegraphed that the U.S. consumer is selective, not spent, rewarding brands that deliver value and relevance. Hewlett Packard Enterprise firmed on better results, while C3.ai fell amid leadership changes and a reset of execution timelines.
Rates and factors did their usual dance. As the 10-year yield drifted lower, profitability and quality factors outperformed, while value and high beta chopped. The dollar eased at the margin, removing a small headwind for multinationals. Options flow tilted defensive ahead of Friday’s print, with traders favoring downside protection in cyclicals and gamma-light positioning in mega-cap tech to avoid getting whipsawed by headline risk.
What to watch from here: whether Friday’s payrolls confirm “cool but not cold” conditions that validate a measured Fed easing path. If so, equities can sustain a sideways-to-up grind led by quality growth and select consumer names, with mining the middle—profitable companies with pricing power—beating broad cyclicals. If payrolls miss hard, expect a stronger duration bid, a softer dollar, and a rotation toward defensives and cash-flow visibility.
In short, the post-open tape delivered a pragmatic message: the jobs data moved the needle on rate-cut expectations, but not enough to break the market’s range. Until Friday’s report lands, patience, position sizing, and respect for intraday volatility remain the right tools for navigating a market that’s listening more to macro than to headlines.