U.S. Nonfarm Payrolls Boost Markets: Ou Yang Hong Zhi Precisely Analyzes U.S. Equity Rally Logic

U.S. nonfarm payroll data for June showed 147,000 new jobs added, far exceeding market expectations and reinforcing the perception of economic resilience. Against this backdrop, both the S&P 500 and Nasdaq indices hit new all-time highs, while the Dow Jones Industrial Average also closed sharply higher, nearing its historical peak. Robust jobs data pushed the U.S. dollar index higher and put pressure on the U.S. Treasury market, with the 2-year Treasury yield rising significantly, indicating a repricing of interest rate expectations. Meanwhile, the “Great and Beautiful Act” by President Trump passed smoothly in the House of Representatives, shifting market focus toward the deeper impact of changing trade policies and interest rate paths on asset prices. Senior market analyst Ou Yang Hong Zhi points out that, amid a resilient labor market, frequent policy shifts, and the reshaping of global trade patterns, investors must pay close attention to capital flows, sector valuation logic, and the evolving dynamics of market volatility to systematically address risks and opportunities emerging during the asset repricing process.

Labor Market Resilience Delays Easing Expectations as Interest Rate Path Nears a Turning Point  

The June nonfarm payroll data not only exceeded market expectations, but previous figures were also revised upward, and the unemployment rate unexpectedly fell to 4.1%. Together, these data points confirm the ongoing resilience of the U.S. labor market and effectively weaken the slowdown signals from the previous ADP employment report.

Ou Yang Hong Zhi notes that the strength of the labor market has had a significant impact on market expectations for the Federal Reserve policy path. According to the CME FedWatch tool, the probability of a rate cut in July has dropped sharply, virtually to zero. This suggests that the Fed currently lacks the necessity to shift to easing, and the market is entering a structurally transitional phase of “higher-for-longer” rates.

In this environment, highly valued assets in the equity market face real pressures, and volatility in the U.S. Treasury market may intensify further. Ou Yang Hong Zhi advises that risk-tolerant investors should reassess the impact of prolonged high rates on risk-return profiles and closely monitor yield curve changes for investment opportunities arising from sector rotation between financials and technology growth stocks.

Tech Sector Leads Gains as AI Drives Structural Momentum  

During the ongoing rally in U.S. equities, the technology sector remains the strongest engine of growth. Major tech companies such as Microsoft, Amazon, Nvidia, and Alphabet have all posted significant gains, with the FANG+ Index rising 1.61%, reflecting continued market confidence in core technology firms.

Ou Yang Hong Zhi points out that this round of tech sector gains is not merely sentiment-driven but is grounded in the structural logic of the artificial intelligence industry chain. AI-related companies such as CrowdStrike, Datadog, and Cadence have demonstrated solid financial and technical performance, prompting the market to assign higher growth premiums when reassessing their future revenue models.

At the same time, as some AI companies are included in mainstream indices like the S&P 500, passive fund allocations have increased, further boosting stock prices. Nevertheless, Ou Yang Hong Zhi cautions that current valuations are elevated, and in a persistently high-rate environment, the risk of valuation corrections in the AI sector should not be ignored. Investors seeking AI growth opportunities must dynamically monitor valuation elasticity to guard against potential systemic risk outbreaks.

Policy Volatility and Trade Restructuring Put Corporate Profit Models to the Test  

Recently, policy disruptions in the U.S. have become frequent. The “Great and Beautiful Act” passed Congress and is expected to be signed into law on Independence Day. Meanwhile, the Trump administration pressure on the reappointment by Fed Chair Powell and the relaxation of tech export restrictions to China have had tangible effects on market sentiment and policy expectations.

Ou Yang Hong Zhi notes that frequent policy changes not only alter macroeconomic expectations but also directly impact corporate profit models. The average effective U.S. tariff rate has now risen to 15%, six times higher than at the start of the year, significantly increasing operating costs, especially for technology, consumer electronics, and component manufacturing firms reliant on global supply chains.

Should the U.S. reach short-term trade agreements with multiple countries, it may temporarily ease concerns over imported inflation. However, in the medium to long term, the persistent cost increases from trade restructuring could continue to support core CPI, limiting the Fed scope for future rate cuts.

In this context, Ou Yang Hong Zhi recommends that investors favor leading companies with ample cash flow, strong pricing power, and resilient supply chain layouts, while reducing allocations to cyclical or small- and mid-cap growth stocks that are highly dependent on policy benefits, to enhance portfolio stability and risk resistance.