Stocks climbed steadily on Thursday as investors digested a combination of calmer inflation data and signals that U.S. hiring is losing some steam, accelerating market expectations for an interest‑rate cut by the Federal Reserve. The S&P 500 rose about 1.1 percent, the Nasdaq outperformed at roughly 1.4 percent, and the Dow Jones Industrial Average added near 0.8 percent, with gains led by interest‑rate sensitive sectors such as utilities and housing‑related names while regional banks lagged.

Traders moved quickly to reprice the Fed outlook. Futures markets pushed up the odds of at least one 25‑basis‑point reduction in the federal funds rate before year‑end, reflecting a material shift from just a few weeks ago when markets discounted lower odds of easing. The change in sentiment followed a set of economic releases that, taken together, painted a picture of slower inflation and a labor market that is finally loosening from its post‑pandemic tightness.

The Bureau of Labor Statistics and the Commerce Department each released data that market participants described as “consistent with a soft landing.” Inflation measures came in near expectations, showing a moderation from earlier readings and easing pressure on the Fed’s price‑stability mandate. At the same time, employment indicators showed hiring momentum cooling: weekly initial jobless claims edged higher and private‑sector payroll reports suggested hiring remained positive but below the pace of previous months.

“This is the mix the market wants to see: inflation not flashing hot and the labor market easing just enough to give the Fed cover to cut,” said a market strategist at a large New York brokerage. “Traders are paying attention to the trajectory rather than a single print.”

Policy makers face a delicate tradeoff. Chair Jerome Powell and other Federal Reserve officials have repeatedly emphasized their data‑dependent approach; a persistent slowdown in inflation toward the 2 percent target combined with clear evidence of labor‑market slack would strengthen the case for loosening. But inflation remains above target on many measures, and the Fed has cautioned against overreacting to short‑term swings.

Analysts cautioned that one soft month does not guarantee a cut. “The Fed is unlikely to pivot on a single round of readings,” said an economist at a major investment bank. “They will look for sustained easing in services inflation and wage growth before committing to a policy shift.” Market economists note that core inflation and wage trajectories will be central to that judgment.

The market rally also reflected technical positioning and a relief bid among investors who had feared persistently higher rates. Bond yields fell, with the two‑year Treasury easing after pricing in increased odds of easing, while the 10‑year yield dipped as investor demand for duration picked up.

Looking ahead, attention turns to upcoming inflation and payroll reports and speeches by Fed officials, any of which could confirm or reverse the recent market repricing. For investors, the short window between data releases and the end of year policy calendar means volatility may remain elevated as markets test whether this week’s readings signal the start of a genuine disinflationary trend or merely a pause.