US Stocks End Lower as Strong Jobs Data Fuels Hawkish Fed Bets
Key Takeaways
- •US job growth accelerated in August with payrolls beating expectations and unemployment steady at 4.1%, raising expectations of a Fed rate hike this month.
- •Treasury yields rose, gold slid, and Bitcoin fell below $80,000 after the strong jobs report, with investors now focused on next week's inflation data.
- •Citigroup delayed its projected Fed rate cuts to mid-2027, while Cleveland Fed chief Beth Hammack urged rate hikes to combat inflation.
- •Lululemon's stock plunged to an eight-year low on sliding sales and a cut outlook, and federal regulators launched a probe into Tesla's Cybercabs.
- •Copper approached a record high on a 10-week winning streak driven by inventory shortages, while US diesel prices hit a record high.
Wall Street ended lower on Friday after a stronger-than-expected US jobs report raised expectations of a Federal Reserve rate hike this month. The S&P 500, Nasdaq and Dow all fell, while investors turned their focus to next week's inflation data for clues on the Federal Reserve's policy path. A robust labor market typically keeps the Fed focused on inflation, since persistent wage and hiring pressure can sustain price growth and reduce the case for easier policy.
Markets and the Fed
US job growth accelerated in August as payrolls beat expectations, while unemployment remained at 4.1%, Bloomberg reported. Strong US jobs growth fueled Fed rate hike prospects even as President Donald Trump escalated pressure for rate cuts. Trump also threatened to halt trade with nations running deficits against the United States over Fed rates, a reminder of the ongoing tension between the White House and a central bank that operates independently of the executive branch.
Cleveland Fed chief Beth Hammack urged rate hikes to combat inflation. Bond traders increased the odds they assign to a Fed rate hike following the strong jobs report, and Citigroup delayed its projected Fed interest rate cuts to mid-2027 following the job growth. US Treasury yields moved higher after the strong employment report, with focus now shifting to next week's inflation data. The dollar rose on strong payrolls before trimming gains ahead of the inflation figures. Gold slid as the strong US jobs data drove Federal Reserve rate hike bets, and the report sent Bitcoin back below $80,000, according to Bloomberg.
Goods producers outperformed services as AI investment drove job growth, the data showed, extending a pattern in which data center construction and AI infrastructure spending have supported hiring in manufacturing and construction even as services cooled. Inflation data is next on investors' radar.
Company News
Lululemon's stock plunged to an eight-year low as sales slid, with the company also cutting its outlook. Adobe fell after announcing a CEO transition. Federal regulators launched a probe into Tesla's new Cybercabs.
AI cloud startup Nscale is pursuing $3.5 billion in pre-IPO financing, and AI startup Micro1 has bid $12.5 million for Spirit Airlines data. Blue Owl Capital is planning a public data center REIT to fuel AI growth. Star Integratia is seeking a Nasdaq listing under the ticker ITIA. Jefferies explained why it remains bullish on Big Tech's $1-trillion AI bet, which continues to draw capital across the supply chain even as other corners of the market, such as consumer discretionary retailers, struggle.
Major personnel departures triggered heavy oil bets at a Simplify quant ETF. S&P rated Wisconsin's 2026B general obligation bonds Aa+ with a stable outlook.
Hong Kong Filings
JPMorgan Chase & Co's short position in H-shares of China Pacific Insurance decreased to 1.78% on Aug 31 from 2.28%, an HKEX filing showed. BlackRock cut its long position in Cosco Shipping Energy Transportation H-shares to 5.68% from 6.38%, HKEX said. Such disclosures are required under Hong Kong exchange rules when significant shareholders cross defined ownership thresholds, giving markets a window into institutional positioning in Chinese H-shares.
Energy and Commodities
US energy firms kept the overall rig count unchanged at 588, with the natural gas rig count declining as oil drilling activity held steady. US diesel prices hit a record high, pushing up transportation costs for a long list of goods. Copper approached a record high as inventory shortages drove a 10-week winning streak, keeping attention on supply constraints in metals central to electrification and power infrastructure.
Trump's sweeping Venezuela oil agreement sparked deep concern across the US energy industry. The US sanctioned a Turkish bank to cut off a financial network for Iran, and Trump warned that the US may soon strike Iran's Pickaxe Mountain facility.
Legal and Regulatory
A federal judge upheld Minnesota's AI nudification ban against a lawsuit brought by xAI, a ruling watched closely as states test how far they can regulate AI-generated content.
Source: Economic Times Markets
