SPY, QQQ Rally on Rate Cut Expectations Despite Weak Jobs Data

U.S. equity ETFs surged in late trading as markets priced in near-certainty of a September Fed rate cut. The SPDR S&P 500 ETF (SPY) and Invesco QQQ Trust (QQQ) closed higher after a dramatic afternoon rally, shrugging off concerning labor market signals.

July's JOLTS report revealed deteriorating conditions - layoffs ROSE to 1.808 million versus 1.639 million expected, while job openings dipped below estimates at 7.181 million. For the first time since April 2021, unemployed workers now outnumber available positions.

CME's FedWatch tool shows traders assigning 95.4% probability to a September rate reduction, up from 88.7% last week. Fed Governor Waller has publicly advocated for imminent policy easing, arguing that cooling employment metrics warrant stimulative measures.