US stocks closed lower on Friday, with the Dow Jones Industrial Average shedding 279 points (0.5%), as a robust August jobs report reinforced expectations that the Federal Reserve will raise interest rates at its September meeting. The S&P 500 declined 0.38%, and the Nasdaq Composite lost 0.3%.
The August nonfarm payrolls increased by 162,000, nearly triple the consensus estimate of 56,000 cited by Reuters. The unemployment rate held at 4.1%, while June and July figures were revised upward by a combined 55,000 jobs. The data suggests the labor market remains resilient despite a slowdown in hiring momentum earlier in the summer.
Rate hike expectations jump
Following the report, markets priced in a 58.4% probability of a 25-basis-point rate increase at the Fed's September 15-16 meeting, up from 49.4% on Thursday, according to the CME FedWatch tool. Treasury yields moved higher, with the two-year yield reaching its highest level since January 2025.
The strong employment data complicates the Fed's policy outlook. While a healthy labor market supports economic activity, it could also make it harder for policymakers to ease inflationary pressures, especially with energy prices elevated amid the US-Iran conflict. Investors now turn to upcoming inflation reports, including consumer and producer price data, for further guidance.
Friday's losses came after a mixed week. The Dow posted a 0.3% weekly decline, the S&P 500 was roughly flat, and the Nasdaq gained 0.3%. Semiconductor stocks outperformed on Friday, though the sector remains down about 18% for the quarter. Software and services stocks lagged after gaining about 25% over the same period.
Corporate movers: Lululemon, Adobe, and credit firms
Lululemon Athletica fell after cutting its full-year revenue and profit forecasts. Adobe declined following the announcement that longtime CEO Shantanu Narayen would be succeeded by company insider Anil Chakravarthy. Credit reporting companies also slid after Federal Housing Finance Agency Director Bill Pulte said he directed Fannie Mae and Freddie Mac to approve all lenders to use VantageScore's credit scoring system. Shares of Fair Isaac, TransUnion, and Equifax closed sharply lower.
The broader market remains focused on how incoming economic data will shape the Fed's policy path. The latest employment report provides evidence of labor market strength, but it also raises the stakes for next week's inflation readings. US markets will be closed Monday for the Labor Day holiday, with trading resuming Tuesday as investors continue to assess the outlook for rates and the economy.
For more context on how jobs data are influencing market moves, see our earlier coverage on Nasdaq futures ahead of the report and the impact on gold prices.
This article is for informational purposes only and does not constitute financial advice.
