Dow Jones Gains 225 Points, Nasdaq Recovers After Tuesday's Sell-Off on Positive Macros
The Dow Jones increased by 225 points, bringing its two-day performance back to neutral after a nearly 250-point drop on Tuesday. Both the S&P 500 and Nasdaq closed higher but did not fully regain their losses from the previous day.
Impact of Positive Macroeconomic Data
Positive macroeconomic indicators reduced the likelihood of a 25 basis points rate cut by the US Federal Reserve. As per CME FedWatch, the probability of such a cut dropped from 68% on Tuesday to 61% on Wednesday.
What this positive macro data did, is bring down the probability of a 25 basis points rate cut from the US Federal Reserve further down.
Market Movement on November 5, 2025
US markets rebounded modestly from earlier declines on November 5, driven by buying interest in AI-related semiconductor stocks and supported by encouraging macroeconomic reports.
- ADP Private Payrolls: Companies added 42,000 jobs in October, reversing a three-month decline and surpassing the estimate of 22,000. However, ongoing job losses among smaller businesses remain a concern.
- Services PMI: The index rose to 52.5, marking the fastest growth pace in eight months. This is significant as the services sector constitutes a major portion of the US economy. In contrast, the Services PMI in September was flat at 50.
ADP private payrolls indicated that companies added 42,000 jobs in October, a first after three months of decline, and better than the estimate of 22,000.
The services form a greater part of the US economy. Services PMI in September was stagnant, at 50.
These data points helped boost confidence in the markets despite some lingering concerns over small business job losses.
Author's summary: Positive US macroeconomic data helped the Dow Jones and Nasdaq recover partially after losses, lowering expectations for Federal Reserve rate cuts amid improved payroll and services sector growth.
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