S&P 500 and Nasdaq closed at record highs despite major job data revisions

Wall Street didn’t blink. All three major indexes closed at record highs Tuesday, ignoring warning signs in the economy like it was business as usual.

The S&P 500 finished the session up 0.27% at 6,512.61, while the Nasdaq Composite rose 0.37% to close at 21,879.49, a new intraday record too. The Dow Jones Industrial Average added 196.39 points, or 0.43%, landing at 45,711.34.

One big reason? A surge in UnitedHealth stock.

Meanwhile, new labor data dropped like a hammer. The Bureau of Labor Statistics revised its numbers for the 12 months through March, cutting 911,000 jobs from the books, Cryptopolitan reported Tuesday.

These weren’t tiny adjustments. This was the biggest downward revision since at least 2002. It was also way worse than Wall Street expected. Basically, job growth during that period was a lot weaker than people thought.

“I think the economy is weakening,” said Jamie Dimon, CEO of JPMorgan Chase, during a chat with CNBC. “Whether it’s on the way to recession or just weakening, I don’t know.”

Stocks rally despite ugly job numbers

Despite the brutal revisions, markets barely reacted. Why? Because the data covered a period that ended six months ago. Traders didn’t see it as an immediate problem. But there’s a twist, this kind of bad labor data might pressure the Federal Reserve to start cutting interest rates faster than planned.

That’s what Wall Street really cares about.

Chris Zaccarelli, the chief investment officer at Northlight Asset Management, put it this way: “The jobs picture keeps deteriorating and while that should make it easier for the Fed to cut rates this fall, it could also throw some cold water on the recent rally.”

So yeah, rate cuts could come. But they will likely not be the magic fix everyone’s betting on.

Tech stocks, especially semiconductors, have been doing a lot of the heavy lifting lately. Broadcom and Nvidia helped push the Nasdaq to that record high earlier this week.

But Broadcom took a hit on Tuesday, falling more than 2%, after rallying nearly 13% over the past week. That little stumble didn’t derail the bigger momentum, but it was a reminder that even hot stocks can cool fast.

Traders watch inflation, and AI frenzy grows

What’s next? Two big inflation reports that could shape what the Fed decides at its meeting next week. The Producer Price Index (PPI) for August comes out on Wednesday morning.

Then on Thursday, it’s the Consumer Price Index (CPI). If either one shows inflation heating up again, it could kill the whole “rate cuts are coming” fantasy.

“If the CPI shows a worsening trend of higher inflation on Thursday then the market will begin worrying about stagflation,” said Zaccarelli. “The bull market has been extremely resilient this year, but we could be approaching an inflection point where it is tested again.” In plain English: If prices rise and growth slows at the same time, things could get messy.

While Wall Street kept one eye on inflation and the other on job data, a full-on buying frenzy broke out in the AI space. Nebius Group, a lesser-known infrastructure company focused on artificial intelligence, exploded almost 50% higher Tuesday.

That came one day after it announced a multi-billion-dollar deal with Microsoft. The stock had already jumped 60% in extended trading on Monday.

Nebius’s rival CoreWeave saw its own boost, up 8%, just from riding the same wave.

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