Stocks climbed the most since June, while bond yields retreated after economic reports bolstered speculation the Federal Reserve is getting closer to wrapping up its aggressive tightening campaign.

Nearly 90 per cent of the S&P 500 companies rose as the gauge closed just shy of 4,500. A rally in megacaps like Tesla Inc. and Nvidia Corp. sent the Nasdaq 100 up 2 per cent. Treasury two-year yields sank 17 basis points to around 4.9 per cent. The crypto space saw gains across the board as a U.S. court ruling paved the way for the first Bitcoin exchange-traded fund. The world’s largest digital token jumped 7 per cent, Coinbase Global Inc. led the industry’s shares higher while the Grayscale Bitcoin Trust soared 17 per cent.

Swap contracts showed lower wagers on a Fed hike in 2023 and a greater chance of a policy pivot in the first half of 2024. Traders are currently pricing in a 56 per cent probability of a quarter-point rate increase in November — down from 75 per cent earlier Tuesday. They also brought forward bets on the expected start of rate cuts to June from July of next year.

U.S. job openings fell by more than expected to 8.83 million — a more than two-year low — offering fresh evidence that labor demand is slowing down. Separate data showed consumer confidence dropped amid souring views on jobs, higher borrowing costs and lingering inflation.

“The Fed reiterated its commitment to be data-dependent, and with reports like this, the Fed can most likely keep rates unchanged in September,” said Jeffrey Roach, chief economist at LPL Financial. “Investors should expect a softening labor report this Friday, further cementing the thesis that the Fed is getting close to finishing its tightening cycle.”

 ‘ANSWER TO THE FED’S PRAYERS’

From the Fed’s perspective, the week is off to a promising start — with the Job Openings and Labor Turnover Survey much weaker than expected, alongside downward revisions. Further softness over the next few months looks “plausible,” and that could lead to a cooler labor market and sustainably lower wage growth, according to Craig Erlam, senior market analyst at Oanda.

“Today’s JOLTS report was an answer to the Fed’s prayers,” offering more evidence of a “cooling economy,” said Ronald Temple, chief market strategist at Lazard.

Traders will get more clues on the health of the labor market with Wednesday’s reading on private payrolls and Thursday’s jobless claims figures. The data will precede Friday’s government report, which is forecast to show employers boosted their payrolls by 170,000 in August, while the unemployment rate held at a historically low 3.5 per cent.

Corporate Highlights:

• Regional banks rose even after U.S. regulators unveiled a proposal to boost oversight of midsize lenders and require them to be better prepared for potential failures.
• Apple Inc. has set Sept. 12 as the date for its biggest product-upgrade event of the year, when it’s set to unveil the iPhone 15 line and next-generation smartwatches.
• Tesla Inc. is facing increased scrutiny from federal regulators over its driver-assistance system known as Autopilot, with investigators demanding to know if the electric carmaker has made it easier for drivers to take their hands off the wheel.
• A gauge of U.S.-listed Chinese stocks rallied as Bloomberg News reported that the nation’s largest banks are preparing to cut interest rates on existing mortgages and deposits, the latest state-directed measures to shore up growth in the world’s second-largest economy.
• Best Buy Co. climbed after executives said that a painful sales slump in consumer electronics and household appliances is showing signs of easing.
• Pharmaceutical giants spanning Bristol-Myers Squibb Co. to Johnson & Johnson and Eli Lilly & Co. are the first targets of President Joe Biden’s historic foray into bargaining with drugmakers to lower the cost of medicine.

Key events this week:

• Eurozone economic confidence, consumer confidence, Wednesday
• U.S. GDP, wholesale inventories, pending home sales, Wednesday
• China manufacturing PMI, non-manufacturing PMI, Thursday
• Japan industrial production, retail sales, Thursday
• Eurozone CPI, unemployment, Thursday
• ECB publishes account of July monetary policy meeting, Thursday
• U.S. personal spending and income, initial jobless claims, Thursday
• China Caixin manufacturing PMI, Friday
• Eurozone S&P Global Eurozone Manufacturing PMI, Friday
• South African central bank governor Lesetja Kganyago, Atlanta Fed President Raphael Bostic, BOE’s Huw Pill, IMF’s Gita Gopinath on panel at the South African Reserve Bank conference, Friday
• Boston Fed President Susan Collins speaks at virtual event, Friday
• U.S. unemployment, nonfarm payrolls, light vehicle sales, ISM manufacturing, construction spending, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 1.5 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 2.2 per cent
• The Dow Jones Industrial Average rose 0.8 per cent
• The MSCI World index rose 1.5 per cent

Currencies

• The Bloomberg Dollar Spot Index fell 0.4 per cent
• The euro rose 0.6 per cent to US$ 1.0884
• The British pound rose 0.4 per cent to US$ 1.2650
• The Japanese yen rose 0.5 per cent to 145.82 per dollar

Cryptocurrencies

• Bitcoin rose 7.2 per cent to US$ 27,853.79
• Ether rose 5.5 per cent to US$ 1,736.96

Bonds

• The yield on 10-year Treasuries declined nine basis points to 4.11 per cent
• Germany’s 10-year yield declined five basis points to 2.51 per cent
• Britain’s 10-year yield declined two basis points to 4.42 per cent

Commodities

• West Texas Intermediate crude rose 1.4 per cent to US$ 81.23 a barrel
• Gold futures rose 1 per cent to US$ 1,966 an ounce