MARKET SNAPSHOT
A hotter-than-expected jobs report sent U.S. stocks lower and bond yields higher on Friday, as traders boosted bets on a rate hike from the Federal Reserve this month. The dollar strengthened, while gold and silver settled lower. Oil prices rose.
MARKET WRAPS EQUITIES
U.S. stocks fell on Friday after surprisingly strong jobs data muddied the outlook for Federal Reserve policy.
The Dow Jones Industrial Average fell 0.5%. The S&P 500 declined 0.4% and the tech-heavy Nasdaq Composite shed 0.3%.
American employers added 162,000 workers to payrolls in August, roughly three times the number that economists had forecast. The unexpected rebound in the labor market brightened the outlook for economic growth but also increased pressure on the Fed to take action on inflation.
The jobs report confirmed that "the U.S. economy is in a cyclical upturn, fueled by stimulative policy and optimism emanating from the buildout of AI," said economists at brokerage BNP Paribas, in a note to clients. "We remain convinced that the unemployment rate will continue to fall in a supply-constrained labor market and expect this to put upward pressure on wages."
Odds of a rate hike at the upcoming central bank meeting increased to roughly 60% on Fed funds futures markets, rebounding after a hint from a bank governor Thursday that he might support holding rates steady.
Asian stocks mostly rose earlier Friday with Japan's Nikkei Stock Average advancing 1.3% and Hong Kong's Hang Seng Index up 1.7%. South Korea's Kospi ended 1.6% higher.
In China, the Shanghai Composite fell 0.3%, the Shenzhen Composite fell 0.8% and the ChiNext Price Index fell 0.8%.
Stocks in Australia slipped Friday, as the S&P/ASX 200 Benchmark Index dropped 0.2%. New Zealand's S&P/NZX 50 Index increased 0.9%.
COMMODITIES
Crude futures settled higher in a choppy session ahead of the U.S. Labor Day long weekend, closing out a week of gains that saw the resumption of U.S. strikes on Iranian targets and Iranian attacks on shipping.
Oil price gains have been tempered by limited flows getting through the Strait of Hormuz, although differences remain on how much oil is making it out. A bigger-than-expected 4.5 million barrel draw in U.S. crude stocks reported midweek by the EIA added upside pressure.
WTI settled up 0.2% at $91.48 a barrel, up 9.7% on the week. Brent rose 0.8% to $96.28, or 9.3% higher than a week ago.
Gold futures fell as U.S. payrolls increased well above expectations in August, pushing up short-term Treasury yields and raising expectations of a possible September Fed hike. President Trump, however, called for lower interest rates following the employment report.
"A resilient labor market would give the Fed permission to move rates higher at the September meeting if upcoming August inflation data does not show continued improvement, but that political pressure to maintain lower rates looms in the background," Mike Castle of StoneX said in a note.
Front month gold settled down 1.4% at $4,429.80 a troy ounce for a 1.1% loss on the week. Silver fell 1.4% to $66.047, also a 1.4% weekly loss.
TODAY'S TOP HEADLINES
U.S. Adds a Whopping 162,000 Jobs in a Bright Spot for the Economy
The U.S. added 162,000 jobs in August, the Labor Department reported Friday, a much-stronger-than-expected result that suggested the labor market shook off its early-summer doldrums.
The unemployment rate stayed steady at 4.1%. That leaves it at a historically low level that indicates the labor market remains generally healthy.
U.S. Retail Diesel Prices Hit Record High as Global Supply Tightens
U.S. diesel prices jumped to a fresh record high as prolonged disruptions to Middle East energy flows and Russian refineries continue to tighten global supplies ahead of peak-demand season.
The national average price of diesel hit $5.850 a gallon on Friday, the highest on record, according to the American Automobile Association. A year ago, prices averaged $3.712 a gallon.
Russia-traditionally one of the world's largest exporters of refined fuels-has cut domestic fuel production and restricted diesel exports following sustained Ukrainian attacks on its refineries. In the Middle East, the war has curtailed flows through the Strait of Hormuz, a critical waterway carrying large volumes of Gulf oil and refined products.
Bill Pulte Instructs Fannie and Freddie to Approve VantageScore in Blow to FICO Scores
Shares of Fair Isaac, Equifax, TransUnion, and Experian were all falling on Friday following Thursday night social media posts from Bill Pulte, the head of the Federal Housing Finance Agency.
Fair Isaac, the maker of the FICO score, was down 16.7% in morning trading. It was on pace for its largest percent decrease since March 16, 2020, when it fell 20.7%, according to Dow Jones Market Data.
The drop came after Pulte wrote that he was instructing Fannie Mae and Freddie Mac to allow all lenders to evaluate borrowers based on VantageScore, a credit evaluation product that competes with the separate FICO score made by the credit bureaus Equifax, Experian, and TransUnion.
Week Ahead for FX, Bonds: U.S. Inflation Data in Focus; ECB Expected to Raise Rates
Focus in the coming week will center firmly on U.S. inflation data as investors gauge whether the Federal Reserve could raise interest rates in the coming months, and possibly as early as this month.
In Europe, the European Central Bank is expected to raise interest rates again due to elevated energy prices.
In Asia, investors will focus on signals for the Bank of Japan's rate path and Chinese trade and inflation data. Meanwhile, leaders from BRICS member and partner countries will gather as geopolitical tensions and strains on global trade intensify.
NHTSA Opens Probe Into Tesla's Cybercab Rollout
Federal regulators have opened an investigation into Tesla and the company's steering-wheel-free Cybercab to determine whether it complies with safety standards.
Tesla launched the Cybercab, a two-seater gold coupe without pedals or mirrors, saying Thursday that customers in Austin, Texas can book rides through its Robotaxi ride-hailing app.
The vehicle's novel design potentially puts it in conflict with federal safety standards, which were developed for traditional motor vehicles by and large several decades ago. Tesla told the National Highway Traffic Safety Administration the Cybercab meets "all applicable" standards, the regulator said in a filing made public Friday.
Musk's Boring Co. Pushes Investors for Recruiting, Business Help
Elon Musk's tunneling startup, the Boring Company, made an unusual demand of some investors in its latest funding round: If they wanted in, they had to help build the business.
The company has told some investors that participated in the round that they would have to help recruit Boring employees or assist with business development, such as making introductions to government officials in places where the company might build tunnels, according to people familiar with the matter.
The Boring Company, which builds machines that it claims can dig underground more cheaply than traditional construction firms, recently closed an investment round that values the company at around $20 billion, the people said.
Computer Makers Are Selling Fewer PCs at Higher Prices. So Far, It's Working
Computer makers have been forced into an interesting trade off: Sell fewer PCs at far higher prices.
The trend is being driven by the same shortage of memory chips, and accompanying soaring costs, stemming from the massive buildout of artificial-intelligence infrastructure. The bottleneck has trickled down to personal computers, which has sent prices higher, at the expense of units sold.
Worldwide PC shipments were down 4.9% in the second quarter of this year, according to International Data Corp. The firm is projecting that PC prices will be up 20% this year and continue growing modestly in 2027, and that shipments will keep falling.
Expected Major Events for Monday 01:30/AUS: Aug ANZ-Indeed Job Ads
03:30/THA: Aug CPI
05:00/SIN: Jul Retail Sales
05:00/JPN: Jul Indexes of Business Conditions - Preliminary Release
06:30/AUS: Aug Official Reserve Assets
07:00/MAL: Aug International Reserves, end of month
08:30/HK: Aug Foreign Exchange Reserves
09:00/SIN: Aug Official Foreign Reserves
09:59/PHI: Aug Gross International Reserves
09:59/CHN: Aug Foreign Exchange Reserves
10:59/INA: Aug International Reserves
22:45/NZ: 2Q Business Financial Data
23:00/SKA: 2Q Revised GDP / Preliminary Gross National Income
23:30/JPN: Jul Provisional Labour Survey - Earnings, Employment & Hours Worked
23:50/JPN: Aug Provisional Trade Statistics for 1st 20 days of Month
23:50/JPN: Aug Bank Lending
23:50/JPN: 2Q 2nd Preliminary Quarterly GDP Estimates
23:50/JPN: Jul Balance of Payments
23:50/JPN: 2Q Quarterly External Debt & International Investment Position
23:50/JPN: Aug International Transactions in Securities
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