U.S. Stock Market Soars on Dip-Buying Despite Employment Shock

Focus on Increased Possibility of a September Rate Cut

82% of Companies Reporting Q2 Earnings Surpassed Expectations

On the 4th (local time), the U.S. stock market rebounded as dip-buying emerged following a steep drop caused by a shock in employment numbers.

As of 10:15 a.m. Eastern Standard Time, the S&P 500 was up 1.1%, the tech-heavy Nasdaq climbed 1.9%, and the Dow Jones Industrial Average rose 0.9%.

The 10-year Treasury yield, which had fallen slightly earlier in the morning, maintained a level of 4.22%, similar to Friday. The 2-year Treasury yield, which strengthened by dropping 25 basis points in just one day on Friday, also remained firm at 3.702%. Bond prices and yields move in opposite directions.

Investors began dip-buying, anticipating that the Federal Reserve would soon lower interest rates due to worsening employment data.

Tesla approved approximately $30 billion worth of stock for CEO Elon Musk. Following this announcement, Tesla ended its four-day losing streak and rose 3% for the day, trading at $311.90.

Boeing dropped 1.3% as workers at its St. Louis military plant went on strike for the first time in 30 years.

Strong Q2 earnings from companies also boosted investor sentiment.

According to Bloomberg, 82% of companies that have reported earnings so far have exceeded estimates. Profits for S&P 500 companies were tallied to have risen by 9.1%, far surpassing analysts’ initial projections of 2.8%. The ratio of companies beating estimates is the highest in four years.

David Kostin of Goldman Sachs Group noted that American corporate executives have displayed confidence in their ability to minimize the impact of tariffs on earnings.

Chris Larkin of Morgan Stanley E*TRADE emphasized, "It is important whether investors view signs of U.S. economic weakness as a negative for the market or as a catalyst for rate cuts."

On this day, the recent large-scale supply increase by OPEC+ also eased concerns about potential international oil price hikes due to fears of Russian crude oil supply disruption. West Texas Intermediate (WTI) crude fell 2.5% per barrel to $65.68.

Bitcoin showed almost no change at $114,501.53, while Ether rose 2.7% to reach $3,588.76.

Top executives of American companies sharply reduced insider stock purchases last month as share prices repeatedly hit record highs.

According to data compiled by Washington Service, insider stock purchases at 151 S&P 500 companies totaled just 151 cases last month, the lowest since 2018. While insider selling slowed in July compared to June, buying decreased more, pushing the buy-to-sell ratio to its lowest level in a year.

Contributing reporter: Kim Jung-ah kja@hankyung.com