U.S. stocks staged an impressive rebound, with all three major indices surging after a volatile start to August. The Nasdaq closed the session up nearly 2%, while the S&P 500 gained 1.5% and the Dow Jones Industrial Average rose by 1.3%. This strong performance comes after last week’s sharp declines, when concerns over disappointing employment data and downward revisions to previous months’ job numbers initially rattled investor confidence.

The market turnaround has been notable, considering the S&P 500 and Nasdaq both suffered significant losses immediately following the weaker-than-expected July jobs report. Only 73,000 jobs were added in July, far below projections, and previous months’ figures were revised downward. This signaled a potential slowdown in the labor market and briefly sent volatility rising, with the VIX hitting a six-week high. Despite this, investors appear to have seized on the selloff as a buying opportunity at the start of the new week.

Key to the shift in sentiment is changing expectations for future Federal Reserve policy. Prior to the jobs data, the Fed maintained a stance of keeping interest rates steady, with little anticipation of a rate cut in September. However, the labor market miss prompted a dramatic shift, with market participants now pricing in a much higher likelihood of rate cuts as early as September. Bonds also rallied, with the 10-year Treasury yield falling to its lowest level in a month.

This rebound reflects the resilience of equity investors and the ongoing focus on economic data and Fed signals in shaping market trends. As volatility remains elevated and macro conditions evolve, market participants will continue to monitor both economic releases and central bank commentary for further direction.