Wall Street closed higher on Tuesday, driven by utilities and healthcare stocks. Investor confidence about impending rate cuts by the Fed was heightened by a downward payrolls revision by the Bureau of Labor Statistics. All three benchmark indexes closed in the green and reached record highs.
The Dow Jones Industrial Average (DJI) rose 0.4%, or 196.39 points, to close at 45,711.34. Fifteen components of the 30-stock index ended in negative territory, while 15 ended in positive territory.
The tech-heavy Nasdaq Composite added 80.79 points, or 0.4%, to close at 21,879.49.
The S&P 500 gained 17.46 points, or 0.3%, to close at 6,512.61. Seven of the 11 broad sectors of the benchmark index closed in the green. Utilities Select Sector SPDR (XLU), Communication Services Select Sector SPDR (XLC) and Health Care Select Sector SPDR (XLV) advanced 0.7%, 0.6% and 0.5%, respectively, while the Materials Select Sector SPDR (XLB) declined 1.6%.
The fear gauge CBOE Volatility Index (VIX) decreased 0.5% to 15.04. A total of 15.6 billion shares were traded on Tuesday, lower than the last 20-session average of 16.1 billion.
Wall Street traded higher on Tuesday after the Bureau of Labor Statistics (“BLS”) released its payrolls revision report, which added weight to expectations that the Fed may soon cut interest rates. The report showed a deeper-than-expected downward revision to U.S. job growth over the past year, highlighting a labor market that is weaker than previously assumed. Investors interpreted the data as confirmation that the economy is cooling more quickly, reducing inflationary pressures and giving the Fed greater leeway to ease policy.
The BLS revealed a historic annual benchmark revision, trimming about 911,000 jobs from the previously reported payroll figures spanning April 2024 to March 2025. This adjustment, nearly halving the initially estimated job gains, marked the largest downward correction in BLS history and underscored a notably weaker labor market than previously understood.
Equities responded positively, as traders increased bets that the first rate cut could arrive as soon as the Fed’s September meeting. Market-based probabilities for multiple rate cuts by year-end also rose, with stronger conviction that the Fed is approaching the end of its tightening cycle. CME’s FedWatch tool currently assigns a 91.7% probability of a 25 bps rate cut in September, a 68.9% probability of another 25 bps cut in October and a 59.5% probability of a further 25 bps cut in December.
