4:20pm: Not a holiday mood
Wall Street ended lower on Friday as a stronger-than-expected August jobs report reignited concerns that the Federal Reserve could keep interest rates higher for longer.
The Dow Jones fell 272 points, or 0.5%, to 53,414, while the S&P 500 dropped 0.4% to 7,719 and the Nasdaq slipped 0.3% to 26,507.
The August nonfarm payrolls report showed the US economy added 162,000 jobs, well above the consensus estimate, providing fresh evidence of resilience in the labor market. The surprise strength pushed investors away from riskier assets and toward defensive sectors as expectations for a September rate hike firmed.
Bank of America said the jobs report largely reversed the decline in September hike pricing that followed dovish comments from Fed Governor Christopher Waller on Thursday, with markets now pricing in just under a 60% chance of a hike.
The bank added that if August core PCE inflation comes in at 0.24% month over month or higher, the odds of a September hike could move above 50%. Such a scenario could also put pressure on the Fed, as holding rates steady despite higher hike expectations could raise questions about its credibility and potentially push longer-term Treasury yields higher.
Next week will be a shortened trading week following the Labor Day holiday, with US markets reopening Tuesday. The earnings calendar will also be relatively quiet, although Oracle and Adobe are both due to report Thursday.
3:40pm: Small cap wrap
- Fineqia International Inc (CSE:FNQ) reported that global digital asset exchange-traded product assets under management surged 27.2% in August to $138.2 billion, marking the strongest monthly gain of 2026 and the highest AUM level since January.
- Fox Tungsten Ltd (TSX-V:FOXT, OTC:HPYCF, FRA:1HC) received approval to build an access trail through a Wildlife Habitat Area to its Fox Tungsten Project in British Columbia and extended its multi-year area-based permit through March 2031.
- TNR Gold Corp (TSX-V:TNR, FRA:TNW, OTC:TRRXF) urged shareholders to reject dissident investor Jon Christian Evensen’s bid for control and support the company’s nominees as it focuses on advancing its strategy and maximizing the value of its royalty portfolio.
- Miivo AI (TSX-V:MIVO) renewed its SOC 2 Type II certification after an independent audit confirmed its security controls continued to operate effectively.
2:30pm: Market movers
- Adobe Inc (NASDAQ:ADBE) shares fell 6.5% after the company announced that Anil Chakravarthy will succeed longtime CEO Shantanu Narayen as chief executive on December 1.
- Lululemon Athletica Inc (NASDAQ:LULU) shares fell 17% after second-quarter revenue and comparable sales missed expectations and the athletic apparel retailer cut its full-year guidance despite a boost from tariff refunds.
- Fox Tungsten Ltd (TSX-V:FOXT, OTC:HPYCF, FRA:1HC) received approval to build an access trail through a Wildlife Habitat Area to its Fox Tungsten Project in British Columbia and extended its multi-year area-based permit through March 2031.
- DocuSign reported second-quarter revenue, adjusted earnings and free cash flow above Wall Street estimates while raising its full-year revenue guidance as AI-powered contract management products gained traction.
- Zscaler reported fiscal fourth-quarter revenue and adjusted earnings above expectations, but its shares fell 3.5% as free cash flow dropped 65% year-over-year and missed estimates.
1:00pm: Oil retreats (a little)
Oil prices pulled back slightly on Friday but remain on track for their strongest weekly gain since mid-July, according to IG Chief Technical Analyst Axel Rudolph.
Renewed US-Iran strikes and mounting threats against Tehran have raised concerns over potential supply disruptions, particularly around the Strait of Hormuz.
Still, continued oil flows from Iraq and expectations that OPEC+ will keep its October production policy unchanged are helping ease fears about a broader supply squeeze.
11:10am: Fed faces tough decision
Analysts largely agreed August's jobs report beat expectations, but split on what it means next.
Bill Adams of Fifth Third called the strength broad-based, while flagging AI as a factor behind weak hiring for new college grads even as it boosts demand for technical workers.
Charlie Ripley of Allianz pointed to falling wage growth as a sign the labor market isn't overheating.
Chris Zaccarelli of Northlight called it a "good news is bad news" moment for markets bracing for a possible rate move.
Jeffrey Roach of LPL argued a hike now might cause less market disruption than another pause.
Taken together, the reactions suggest one thing: the Fed's next decision is anything but straightforward.
9:55am: Jobs report lifts rate hike bets
Wall Street opened slightly lower on Friday as investors digested a surprisingly strong US jobs report that has quickly reshaped expectations for Federal Reserve policy.
The Dow Jones Industrial Average fell 0.4% to 53,454, while the S&P 500 slipped 0.2% to 7,735. The Nasdaq Composite bucked the broader trend, edging 0.1% higher to 26,612.
The hotter-than-expected employment figures sent Treasury yields sharply higher, with the 10-year yield jumping to 4.80% as traders reassessed the outlook for interest rates. Markets are now pricing in roughly a 60% to 70% probability of a Fed rate hike at the September meeting, a significant shift following the latest labor-market strength.
The rate debate is also playing out in Washington. President Donald Trump called for lower interest rates and threatened to halt trade with countries where the US runs a deficit if rates remain elevated.
White House senior adviser Kevin Hassett said inflation is under control, while acknowledging that higher interest rates are now being discussed. He also said the administration respects the Fed's independence and is doing everything possible to bring prices down.
Away from the macro picture, Lululemon shares tumbled 17% after the athleticwear retailer cut its guidance, adding pressure ahead of the arrival of its new CEO next week.
8:50am: Jobs come in strong
The US labor market delivered a stronger-than-expected performance in August, with nonfarm payrolls rising by 162,000, well above economists’ expectations for a 55,000 increase.
The unemployment rate held steady at 4.1%, in line with forecasts, while the participation rate edged up to 61.6% from 61.5%.
Wage growth also came in as expected, with average hourly earnings rising 0.3% month-over-month and 3.1% year-over-year.
Private payrolls increased by 127,000, more than double the 50,000 gain expected, while the average workweek ticked up to 34.4 hours from an estimated 34.3 hours.
Adding to the upbeat tone, July payroll growth was revised sharply higher to 21,000 from the previously reported 23,000 decline.
Overall, the report points to a considerably more resilient US labor market than expected, potentially complicating expectations for the Federal Reserve as investors weigh the outlook for interest rates.
Ahead of the bell
Wall Street is set for a relatively quiet start Friday as investors take a breather following the Dow Jones and S&P 500’s strongest day in nearly a month, with all eyes now firmly on the latest U.S. jobs report.
Dow futures slipped around 0.2% in early trading, while S&P 500 futures were little changed. Nasdaq-100 futures bucked the trend, rising about 0.3% as technology stocks continued to benefit from easing Treasury yields and a more dovish outlook for interest rates.
The big event comes at 8:30 a.m. Eastern time, when the August nonfarm payrolls report lands. Economists are looking for the U.S. economy to have added 53,000 jobs last month, a notable improvement from the 23,000-job decline recorded in July. The unemployment rate is expected to hold at 4.1%.
For markets, the ideal outcome is something of a Goldilocks report. Investors want employment growth to be soft enough to give the Federal Reserve room to keep rates unchanged, but not so weak that recession fears return. A stronger-than-expected report, particularly if accompanied by firm wage growth, could send Treasury yields higher and put renewed pressure on stocks.
That balancing act has already been on display this week. According to Linh Tran, market analyst at XS.com, the recent equity recovery has been helped by a pullback in Treasury yields. The 10-year yield eased from a recent peak of 4.795% to around 4.76% after Fed Governor Christopher Waller said he could support keeping rates unchanged if incoming data confirmed that inflation pressures were easing.
That shift helped reduce expectations for a September rate hike and gave technology and growth stocks some breathing room, pushing the S&P 500 back toward its record high.
Now, the jobs report could determine whether that momentum continues. A reading close to expectations, especially alongside signs of moderating wage growth, could provide the backdrop for the S&P 500 to challenge its record again. On the other hand, a hotter labour market could revive concerns about inflation and higher-for-longer rates.
Away from the macro picture, Lululemon is also in focus after the yoga-wear company delivered another set of results that investors did not take kindly to, sending its shares sharply lower in premarket trading. The stock is drawing additional attention after Michael Burry, the investor made famous by “The Big Short,” disclosed that Lululemon was his biggest holding.
So, while futures are relatively subdued, Friday is unlikely to stay quiet for long.
