Today's jobs report showed that hiring stumbled in August, as the unemployment rate ticked up to its highest level since October 2021. The S&P 500 powered to a record closing high on Thursday and kept on climbing after the jobs report as Broadcom flew on earnings and Tesla rose on a massive new Elon Musk pay deal in morning stock market action.
Federal Reserve Chairman Jerome Powell has said that the unemployment rate is the key number to watch, since immigration policy has shrunk the number of new workforce entrants. While job gains have faded, "the break-even number" — the number of new jobs needed to keep up with growth of the workforce and keep the unemployment rate from rising — has come down too.
9:41 a.m. ET
Reactions To Jobs Report
"Bad news for employment is good news for investors wanting lower rates," said David Russell, global head of market strategy at TradeStation. "A September cut is a near certainty and October is increasingly in play. The punch bowl could be ready to go as job growth grinds to a halt."
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"Today's report makes us more confident in our forecast that the FOMC will ease by 75 (basis points) by the end of the year, and by a further 75bp in 2026," wrote Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. "We continue to think, however, that ongoing concerns about potential inflation stickiness caused by the tariffs will steer the Committee towards easing in 25bp steps, rather than by 50bp this month."
9:35 a.m. ET
S&P 500 Touches New Record
The S&P 500 marched ahead 0.4% on Friday morning, striding into new record territory, following Thursday's all-time closing high.
9:12 a.m. ET
Housing Stocks Level Up As 10-Year Yield Falls
Housing-related stocks crowded into the morning's top S&P 500 performers on Friday as the 10-year Treasury yield slid to 4.065%, the lowest since April 7, when markets were still reeling from President Trump's "Liberation Day."
Lennar rose 2.85%, while Builders FirstSource rose 2.95% and DR Horton 2.6%.
8:58 a.m. ET
Fed Rate-Cut Outlook, Updated
Markets now see 100% odds of a quarter-point rate cut on Sept. 17, but just 2% odds of a 50-basis-point move, according to CME Group's FedWatch tool. However, odds of a subsequent rate cut at the Oct. 29 Fed meeting leapt to 75% from 54%.
Wall Street now sees 69% odds of 75 basis points in Fed rate cuts at the year's final three policy meetings. That's up from 46% a day ago.
8:49 a.m. ET
More Jobs Report Details
The private sector added 38,000 jobs, below 75,000 forecasts, according to Econoday. The government shed 16,000 jobs, with the federal government accounting for a 15,000 reduction.
Manufacturers cut 12,000 jobs, while the construction sector lost 7,000. Temporary help services firms saw a loss of 9,800 jobs.
But it wasn't a bloodbath across the board. Retailers added 10,500 jobs; the leisure and hospitality sector grew payrolls by 28,000; and health care and social assistance employment rose 46,800.
8:47 a.m. ET
S&P 500 Futures Rise, Treasury Yields Tumble
S&P 500 futures rose 0.25% after being up about 0.1% just before the 8:30 a.m. ET jobs report release. The 10-year Treasury yield fell to 4.10%, which would be a five-month low.
Gold and bitcoin also rallied, while the U.S. dollar fell.
8:45 a.m. ET
Seasonal Factors?
Sometimes the end of summer and return to school can throw off seasonal adjustment. That might explain the jump in labor force participation, which runs counter to the recent trend that Federal Reserve Chairman Jerome Powell has noted.
8:43 a.m. ET
Household Survey Is Surprising
The mid-month survey of households, which is used to derive the unemployment rate, actually painted a much different picture than the employer survey, which provides the monthly change in payrolls.
The household survey can be more volatile because it comes with a higher margin of error. While the unemployment rate increase looks kind of bleak on its face, the underlying data showed that the ranks of the employed grew by 288,000 in August. The number of unemployed persons rose 148,000, though only because the civilian labor force grew by 436,000.
8:36 a.m. ET
Dismal Jobs Report
Employers added just 22,000 payroll positions last month, below 77,000 estimates. The unemployment rate ticked up to 4.3%, as expected.
Average hourly pay also came in softer than expected, with 12-month wage gains sliding to 3.7% from 3.9%.
Adding to the weak picture, job gains for June and July were revised down by a combined 21,000.
Jobs Report Forecast
Economists expect the jobs report to show that employers added 77,000 payroll positions in August, including 75,000 in the private sector, according to the Econoday consensus forecast. The unemployment rate is expected to tick up to 4.3% from 4.2% in July, reaching the highest level since October 2021.
Average hourly wages are seen rising 0.3% as the 12-month rate of wage gains dips to 3.8% from 3.9%.
Labor market data has been soft this week, including job openings, jobless claims and the ADP Employment Report.
Fed Rate-Cut Outlook
Markets are pricing in 97% odds of a quarter-point rate cut at the Sept. 17 Fed meeting, according to CME Group's FedWatch tool. Markets are on the fence about a further rate cut on Oct. 29, with 54% odds of back-to-back rate cuts.
The Fed has been holding its key interest rate in restrictive territory, which puts downward pressure on economic activity and job growth. At his Aug. 22 speech in Jackson Hole, Wyo., Powell noted increasing risk of a rise in unemployment. That balances out the risk of higher inflation, largely due to Trump tariffs, meaning the Fed no longer has to keep interest rates restrictive.
But it's still unclear how deeply the Fed will cut. That will depend on the Fed's assessment of where the neutral interest rate is based on incoming data. However, the Fed outlook in 2026 and beyond could depend on political factors, including President Trump's bid to push out Fed Gov. Lisa Cook over errant mortgage documents.
S&P 500
S&P 500 futures edged up 0.1% ahead of the jobs report. The S&P 500 climbed 0.8% on Thursday, hitting a new record high.
The S&P 500 is up 10.55% on the year and up 30.5% from its 52-week low on April 8.
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