How did the major indices perform for the week ending September 4?
The S&P 500 and Nasdaq closed out the week higher, the Dow closed lower, and a hot jobs report knocked all three down on the final session. It was a mixed week resolved by one Friday morning number.
The S&P 500 gained 0.1% for the week, the Nasdaq Composite added 0.4%, and the Dow Jones Industrial Average fell 0.3%, the only one of the three to finish in the red. Friday's session pulled all three lower into the close: the S&P 500 ended at 7,718.60, down 0.38% on the day, the Nasdaq closed at 26,506.99, down 0.29%, and the Dow fell 271.86 points, or 0.51%, to 53,414.25.
What did the August jobs report show, and why did it move markets?
Payrolls beat forecasts by a wide margin while unemployment held steady, which read as a labor market with no urgent need for the Fed to step in. That combination is what moved yields and stocks Friday, not the headline number alone.
Nonfarm payrolls rose 162,000 in August, nearly three times the 53,000 economists had forecast and the strongest monthly gain since March. The unemployment rate held at 4.1%. Average hourly earnings rose 0.3% to $37.75, up 3.1% year over year.
How did the report change the odds on the Fed's next move?
Rate-hike odds for the September meeting roughly doubled overnight on the strong print. The Fed still hasn't moved off its current range, but futures markets are now pricing a real chance it does.
Fed funds futures tracked by CME FedWatch moved to a 58% chance of a 25-basis-point hike at the September meeting, up from 49.4% the day before the report printed. The Fed's target range has held at 3.50%-3.75% since its last move, and the Federal Open Market Committee meets September 15-16, with the rate decision due at 2:00 PM ET on the 16th.
Which earnings moves defined the week?
Five companies reported this week, all five beat estimates, and the stock reactions split three ways. Beating the number turned out to matter less than what was behind it.
Dell Technologies reported $7.04 adjusted EPS against a $4.90 estimate and raised its full-year revenue guidance to $192 billion, and the stock rose roughly 9%. Ciena beat with $2.11 adjusted EPS on $1.67 billion in revenue, up 37% year over year, and raised its full-year guidance to $6.42 billion at the midpoint, gapping up as much as 7% premarket. The other three beats did not hold up the same way. Palo Alto Networks beat on both revenue and EPS but fell more than 5% on gross-margin compression concerns. MongoDB beat by a wider margin, $1.90 EPS against a $1.61 estimate, and still fell roughly 13% on a guidance-deceleration read. Lululemon had the roughest week of the five: revenue fell 4% and comparable sales fell 9%, and the company cut its full-year guidance for the second time this year, sending the stock down as much as 20% premarket Friday.
What happened with oil and chip stocks earlier in the week?
An overseas strike sent oil sharply higher on Monday while the stocks you'd expect to react barely moved, and a group of unrelated chip names sold off hard on the same session instead. The headline and the market reaction pointed in different directions.
Monday's session opened with new strikes tied to Iran pushing Brent crude up roughly 3% to $90.69, while energy stocks barely moved. Semiconductor names sold off 3% to 4% that same day, with Marvell falling more than 10% after a soft forward guide overshadowed an otherwise clean beat.
What's on the calendar heading into next week?
August's Consumer Price Index is the next major print, landing the Friday before the Fed meets. Whichever way it breaks, it lands directly ahead of a meeting where the market now sees a real chance of a hike.
CPI prints Friday, September 11 at 8:30 AM ET, the last major data point before the Fed sits down September 15-16. A soft print reopens the case for a hold. A hot one confirms the direction Friday's jobs number already pushed the market toward.
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