U.S. large-cap stocks finished lower on Friday, September 4, after unexpectedly strong August payroll growth pushed Treasury yields higher and revived expectations for a Federal Reserve rate increase. The Russell 2000 moved against the broader direction and posted a small gain.
Market at a Glance
| Index | Close | Daily change |
|---|---|---|
| S&P 500 | 7,718.60 | -29.11 (-0.4%) |
| Nasdaq Composite | 26,506.99 | -77.07 (-0.3%) |
| Dow Jones Industrial Average | 53,414.25 | -271.86 (-0.5%) |
| Russell 2000 | 2,975.65 | +7.38 (+0.2%) |
For the holiday-shortened week, the S&P 500 gained 0.1%, the Nasdaq rose 0.4%, the Russell 2000 added 0.1%, and the Dow slipped 0.3%.
Jobs Data Changes the Rate Debate
The U.S. Bureau of Labor Statistics reported that nonfarm payrolls increased by 162,000 in August, well above the average monthly gain of 31,000 during the preceding 12 months. The unemployment rate held at 4.1%.
Average hourly earnings increased 0.3% during August and 3.1% from a year earlier. June and July payroll growth was revised upward by a combined 55,000 jobs. Food services and drinking places added 59,000 positions, while local government education added 42,000; the information sector lost jobs.
Analysis: The report reduced immediate concern about a rapid labor-market deterioration. For markets, however, stronger employment also gives the Fed more room to address persistent inflation with higher interest rates. That explains why good economic news coincided with lower stock prices.
Treasury Yields and Oil
The 10-year Treasury yield rose to 4.78% from 4.77% late Thursday, while the policy-sensitive two-year yield increased to 4.37% from 4.34%. The rise in yields raised the discount rate applied to future corporate earnings and weighed on equity valuations.
Oil added to its strong weekly gain. Brent crude settled 0.8% higher at $96.28 a barrel, while U.S. benchmark crude gained 0.2% to $91.48. Brent and U.S. crude rose 9.2% and 9.7%, respectively, for the week as conflict involving the United States and Iran continued. Source: AP market wrap.
Major Movers
Technology strength limited the major indexes' declines:
- Advanced Micro Devices gained 4.7%.
- Micron Technology rose 6.1%.
- Sandisk jumped 11.9%.
- Nvidia added 0.8%.
Lululemon Athletica sank 17.4%, the largest decline in the S&P 500, after quarterly revenue missed expectations and the company again reduced its full-year outlook. These moves were reported in the AP closing-market coverage.
What to Watch Next
U.S. stock markets will be closed Monday, September 7, for Labor Day. The next regular session will be Tuesday.
Attention now turns to August inflation data. The producer-price index is scheduled for Thursday, September 10, and the consumer-price index for Friday, September 11. Those releases will provide the final major inflation evidence before the Fed's September 15–16 policy meeting.
Analysis: A firm inflation reading following the strong employment report would reinforce the case for higher rates. Softer inflation could keep a policy hold plausible. Treasury yields, oil prices, and the market's reaction to incoming inflation data will therefore remain central when trading resumes.
This article is for informational purposes only and does not constitute investment advice. Market prices and economic information can change after publication.