US Equity Indexes Rise as Sliding Treasury Yields Signal Weak Labor Market to Influence Fed's Easing Path

05:20 PM EDT, 09/08/2025 (MT Newswires) -- US equity indexes rose at the close on Monday as sliding government bond yields signaled traders are pricing in a September restart of monetary policy easing, betting the Federal Reserve will focus more on weakness in the labor market than on inflation.

The Nasdaq Composite was up 0.5% to 21,798.7, after hitting a fresh record of 21,885.6 earlier in the session. The S&P 500 rose 0.2% to 6,495.15, and the Dow Jones Industrial Average was 0.3% higher at 45,514.9. Technology and consumer discretionary were among the gainers, while real estate and utilities led the decliners.

In economic news, consumer expectations for one-year US inflation growth increased to 3.2% in August from 3.1% in the previous month, according to a survey released by the New York Federal Reserve Bank on Monday. The median inflation expectations remained at 3.0% increase for the fourth consecutive month for the three years and were unchanged from a 2.9% jump in the previous month for the five years.

Most US Treasury yields retreated, with the 10-year down four basis points to 4.05%, the lowest since early April. The two-year yield slipped one basis point to 3.5%, the weakest since September 2022.

At its Sept. 17 meeting, the probability the Federal Open Market Committee will cut interest rates by 25 basis points is 88%, according to the CME FedWatch Tool. The remaining 12% likelihood is for a 50-basis-point reduction, implying the Fed is all but set to restart its policy easing program.

The probability of three rate cuts between now and the end of this year, including the one in September, is 69%, as concern mounts over the health of the labor market ahead of the producer and consumer price inflation data due on Wednesday and Thursday, respectively. The headline consumer price index is expected to have risen by 2.9% in August compared with the 2.7% increase in July, according to data compiled by Bloomberg.

Last week on Friday, the Bureau of Labor Statistics data showed 22,000 additions in non-farm payrolls in August, versus 75,000 the market had anticipated.

"The Fed remains committed to -- eventually -- achieving price stability, but as the Committee has shown for years, policy makers are willing to -- continue to -- tolerate above-target price pressures to stave off more pronounced weakness in the economy," Stifel said in a Friday note.

Gold futures rose 0.6% to $3,676.60, after scaling a new peak of $3,685.70 earlier in the session.

In company news, AppLovin (APP) is set to replace MarketAxess (MKTX) in the S&P 500, effective Sept. 22, S&P Dow Jones Indices said. Shares of AppLovin (APP) rose 12%, the biggest gainer on the Nasdaq.

Broadcom (AVGO) got several analyst price upgrades, including from Angus Research, which adjusted its price objective for the company's shares to $375 from $285. Shares jumped 3.2%, among the top performers on the S&P 500 and the Nasdaq.

T-Mobile US (TMUS) and Verizon's (VZ) shares fell 3.9% and 2.4%, respectively, after EchoStar (SATS) agreed to sell its wireless spectrum licenses to SpaceX in a stock-and-cash deal worth about $17 billion.

West Texas Intermediate crude oil futures rose 0.6% to $62.26 a barrel.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.