U.S. equities opened lower on Friday as a robust August jobs report reinforced expectations that the Federal Reserve could raise interest rates at its September meeting. The Dow Jones Industrial Average fell 153 points, while the S&P 500 slipped 0.10% and the Nasdaq Composite was roughly flat at the bell.
The Labor Department reported that the U.S. economy added 162,000 jobs in August, far exceeding the 56,000 gain economists had forecast. The unemployment rate held steady at 4.1%, matching expectations, and prior months' payroll figures were revised upward. The stronger-than-expected labor market data prompted traders to increase their bets on a rate hike later this month.
According to Reuters, short-term interest-rate futures implied a 65% probability of a September increase, up from 55% before the release. CNBC's calculations put the odds at 58%, compared with 49.4% on Thursday. Treasury yields moved higher in response, with the two-year yield reaching its highest level since January 2025 as investors reassessed the Fed's policy path.
The move comes just a day after Fed Governor Christopher Waller suggested he could support holding rates steady if upcoming data confirms inflation is easing. His comments had previously dampened rate hike expectations and helped lift stocks. Now, the strong jobs report has shifted the narrative, making next week's inflation readings even more critical.
Investors are now turning their attention to the consumer price index and producer price index reports scheduled for release next week. These figures could play a decisive role in the Fed's decision at its September 15-16 meeting. Persistent price pressures would likely reinforce the case for tighter monetary policy, while softer inflation could ease the pressure on the central bank.
Despite the weaker open, all three major indexes were on track for weekly gains. The S&P 500 was poised for a 0.5% advance, the Nasdaq for a 0.7% gain, and the Dow for a 0.2% rise. Thursday's rally, which saw the Dow surge more than 600 points, helped set the stage for the positive weekly performance.
Several individual stocks were under pressure in early trading. Lululemon Athletica tumbled 17.5% after cutting its full-year revenue and profit forecasts. Adobe fell 6.8% following the announcement that longtime CEO Shantanu Narayen would step down, with insider Anil Chakravarthy set to take over. Credit reporting companies also declined after U.S. housing official Bill Pulte directed Fannie Mae and Freddie Mac to approve all lenders to use VantageScore. Fair Isaac dropped 20%, TransUnion fell 9%, and Equifax declined 7.9%.
The jobs report also comes as investors weigh the historically weak seasonal performance of U.S. stocks in September. According to SimCorp data, much of the month's weakness has typically occurred during the second half. However, some analysts note that the market's strong August and technical position could help offset the seasonal slump, as discussed in this analysis of the S&P 500's resilience.
Meanwhile, the tech sector has seen some volatility, with Intel and AMD sliding as September opens with a tech selloff. Investors are also monitoring other market-moving events, such as Bitcoin's struggle at the $82K resistance level and Shein's IPO debut.
As the market digests the jobs data and looks ahead to inflation figures, volatility is likely to remain elevated. The Fed's next move will hinge on whether price pressures show signs of cooling, and investors will be watching the upcoming data closely.
This article is for informational purposes only and does not constitute financial advice.
