The sharp correction on the very first day of August made the S&P 500 broad barometer touching the 6,212 mark following a historical record high of above 6,435 only one day before. However, we do not suggest this will last long. This is quite clear because the reason to fall lies solely in the US economy markers, while the market flagships are global businesses with revenue and profits are largely derived from many part of the world.

Moreover, the whole set of labour market data released on August 1 is not a simple reflection of weaker hiring, but also a welcome sign for markets. Indeed, such a slowdown in new jobs should prompt the Federal Reserve to lower its interest rates at last, as they are too high at 4.25% to 4.50%. More than 80% of traders now expect a cooling labour market to push Fed's chair Jerome Powell and his colleagues to cut rates no later than their September meeting, according to FedWatch data. This is exactly what the entire investment community had been waiting for a long, long time, whereas before the August 1 data, the number of traders betting for such an outcome from the September meeting was only about 37%. Getting much more "cheap" money to borrow is revolutionary for the market investment process, helping to reignite the rally even if it fades. Thus, the so-called economic negative from the labour market is a positive in a purely investment context.

Interestingly, the U.S. Bureau of Labor Statistics (BLS) seems to have done a necessary job to shift the Federal Reserve's opinion that the president Donald Trump has so far failed to achieve with his threats to fire Fed's chair Jerome Powell. However, BLS commissioner Erika McEntarfer immediately paid with her job as Trump accused her of faking the jobs numbers. Trump called for new leadership in BLS after its rather shocking manner of a downward revision showing as much as 258,000 fewer jobs created in May and June than it has been previously reported.

It is understandable that data updates could happen as some firms are created or go out of business, and the Bureau doesn't really know that during the course of the last month, until it reconciles the incoming data vs a real full count. Yet, growing concerns about the quality of the U.S. economy started, since any re-evaluations should still have reasonable limits, and the agency was apparently at least slow in summing up the results. The BLS reportedly surveys over 120,000 U.S. employers each month to seek their payroll employment during the week in which the 12th day of the month falls, but the response rate went down over the last several years from 80.3% in 2020 to about 67.1% this year.

Nevertheless, re-estimates in the August 1 release were enormous by historic standards. The downward revision of 125,000 jobs for May was the largest between a second estimate and third estimate since a 492,000 special COVID time case, reported in June 2020 for the payrolls report for May 2020. Friday’s revision was the largest for a change from the second monthly estimate to the third estimate since a 127,000 job downward revision in as early as March 1983, according to BLS own data.

All this is not harmless at all, and if such a significant cooling of the labor market had been signalled in sync with time, then the Fed could have been moved to reduce the interest rate already in July, without waiting for the fall season. However, better late than too late. Weaker jobs numbers contributed to rate cut hopes. That's why Wall Street has quickly recovered. The crowd has eagerly begun to buy fresh dips after last week's pullback, rising more than a full percentage point above 6,300 already in the first hour of regular trading on August 4. All this shaking has only given us and other bulls better prices for a while which may serve to propel the market higher for a longer period. So, all of our previous estimates of early targets above 6,750 and then above 7,000 for the S&P 500 over the coming months of 2025 and early 2026 remain valid.