Wall Street pushed to new records Tuesday after an extraordinary revision to U.S. payroll data flipped the narrative on the labor market and gave traders more conviction that the Federal Reserve will act next week.
The Bureau of Labor Statistics reported that job growth between March 2024 and March 2025 was overstated by 911,000 positions. That adjustment cut the average monthly gains during that period almost in half, dropping from 147,000 to just 70,000. It was the sharpest revision in years and raised serious questions about the underlying strength of the economy.
For investors, the message was clear. A labor market that had appeared steady now looks fragile, and that fragility is exactly the signal markets needed to price in a September rate cut with near certainty. Futures are now pointing to the Fed stepping in with at least a quarter-point move, and some are calling for something larger to get ahead of the slowdown.
The indexes responded immediately. The S&P 500 rose 0.3 percent, the Dow added almost 200 points, and the Nasdaq gained 0.4 percent. All three closed at all time highs. Beneath the surface, leadership was narrow, concentrated in mega-cap technology and healthcare, while smaller stocks underperformed. The Russell 2000 fell about half a percent, a reminder that the rally remains highly selective.
Company moves provided their own spark. UnitedHealth surged nearly 9 percent on news that a majority of its Medicare Advantage members will qualify for government bonuses, giving healthcare investors a fresh reason to stay long. Oracle jumped after hours on strong guidance tied to cloud infrastructure and artificial intelligence demand. And Nebius rocketed almost 50 percent after striking a multi-year AI partnership with Microsoft, showing that appetite for infrastructure deals remains intense even as the macro backdrop cools.
The revision also changes how investors view the last year of economic resilience. For months, policymakers and analysts pointed to steady job creation as evidence that growth was still on track despite higher interest rates. The downward adjustment undermines that narrative, raising the possibility that the slowdown has been building quietly and is only now being acknowledged in the data.
For the Fed, the pressure is rising. The central bank has to balance its inflation fight with the risk of an accelerating downturn in employment. Tuesday’s report tilts the scales toward immediate action. A weaker labor backdrop gives cover to move faster, and markets are betting policymakers will take the opportunity.
The story of the day was not simply about a rally. It was about how quickly confidence can swing when the foundation shifts. The loss of 911,000 jobs on paper re-framed the entire outlook, forcing investors to recalibrate expectations and, in the process, driving stocks to new highs. For now, traders are treating weakness as good news, convinced that policy relief is on the way. The question is how long that trade can last if the cracks in the labor market keep spreading.
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