First Friday of the month can only mean one thing: JOBS day. And today was a stinker. Let’s dive in.
📊 Weekly Market Recap
- S&P 500 return Year-to-date were approximately 10.44%
- S&P 500 return over the past month were approximately 2.15%
- S&P 500 return over the past 7 days were approximately 0.33%
This Week in the Markets- 3 Things to know
- Tech Pulls Back After a Hot Summer – Big tech finally hit the brakes this week after a red-hot run through the summer. Names like Apple and Nvidia cooled off as investors started questioning whether valuations have gotten a little too stretched. Even Broadcom’s solid earnings weren’t enough to keep the momentum rolling, as the stock gave back some early gains. Traders still love the long-term AI story, but in the short term, it feels like the sector needs a breather. With tech carrying so much weight in the indexes, even a modest pullback here could ripple across the broader market.
- Earnings Season Wraps With Mixed Signals – Corporate earnings are mostly in the books now, and the takeaway is a bit of a mixed bag. Many companies managed to beat lowered expectations, which kept stocks afloat, but forward guidance was far less inspiring. Some sectors, like healthcare and consumer staples, showed steady growth, while cyclical areas tied to manufacturing and energy stayed soft. The result is a market that’s leaning more on “multiple expansion” (higher valuations) than true earnings growth. That works while optimism is high, but it doesn’t leave much cushion if the economy slows further.
- Bond Yields Slide on Weak Data – Treasury yields dropped sharply this week after the disappointing jobs report reinforced bets on a Fed rate cut. The 10-year yield, which had been hovering near recent highs, sank as investors piled into bonds looking for safety. Lower yields also reflect the market’s belief that the Fed will be forced to ease not just once, but possibly multiple times before year-end. That’s good news for borrowers since lower rates make credit cheaper, but it also signals concern that growth is fading. For now, yields are telling the story of an economy that needs support, and traders are betting Powell is about to deliver it.
After a week of serious ups and downs this mornings August’s jobs numbers were a real eye-opener in the most volatile month of the year: only 22,000 jobs added, compared to the 75,000 Wall Street was expecting, and the unemployment rate climbed to 4.3%, the highest level we’ve seen in several years.
For context, that’s the weakest pace of hiring since the pandemic recovery, and it suggests that the labor market – once the strongest part of the economy- is now cooling much faster than the Fed had anticipated. The report showed softness across industries, with manufacturing and construction seeing job losses, while only pockets like healthcare and hospitality showed any real resilience. Taken together, this isn’t just a weak report. It’s a flashing signal that momentum in the job market is slipping, and that has massive implications for policy.
Markets reacted instantly. Stocks jumped higher (before giving it back this afternoon), bond yields tumbled, and rate-cut expectations surged. Traders now see a September cut as essentially locked in, and chatter is picking up that Powell could move more aggressively than the standard 25 basis points. Bank of America even floated the possibility of two rate cuts before year-end, which would have been unthinkable just a few months ago when the Fed was still hammering “higher for longer.” In short, this jobs data didn’t just validate Powell’s softer Jackson Hole tone it gave him a green light to put rate cuts back on the table in a meaningful way.
The challenge, of course, is balance. Cutting rates too much, too fast risks undoing hard-won progress on inflation, which only recently has shown signs of cooling. On the other hand, standing in the face of a weakening labor market could damage confidence and risk pushing the economy into a deeper slowdown. Powell’s task now is to thread the needle..ease enough to support growth without re-igniting price pressures. For now, markets are cheering the prospect of easier money, but the real test will be whether the Fed can extend the expansion without losing credibility. What Powell decides in September won’t just move markets for a day it could set the tone for the rest of 2025.
S&P 500 SECTOR SNAPSHOT- Past Week
Top Movers In the Market This Week
