U.S. equities climbed as a tepid jobs report significantly reduced market expectations for a Federal Reserve interest rate hike this month. The economy added just 57,000 jobs in June, far below forecasts, prompting traders to reassess the central bank's policy trajectory. Futures markets now price in lower odds for any rate increases later this year.

Collin Martin of Schwab Center for Financial Research noted the data suggests a patient Fed approach, allowing it to monitor incoming economic indicators. The unemployment rate dipped to 4.2%, but this was partly due to a decrease in labor force participation. This shift implies the job market is less heated than previously thought.

Separately, Meta shares surged on news of its cloud business entry, while chipmakers experienced declines. Small-cap stocks, however, continued their strong performance, outperforming the S&P 500 in the first half. This broadening market participation signals growing economic confidence.

The market faces a quiet trading day Friday due to the Independence Day holiday, with attention turning to the upcoming ISM Services PMI® for further economic signals. The reduced likelihood of an immediate Fed hike provides a supportive backdrop for equities.