Wall Street appears to be grappling with what August’s mixed jobs data means for markets. Stocks fell on Friday, with the S&P 500 notching its worst week of the year after a non-farm payrolls report brought both good and bad news. On the one hand, the unemployment rate fell slightly. On the other hand, overall employment data was lower than expected. In addition, employment growth in the first two months was revised down sharply. However, this latest jobs report made one thing clear to some investors: The labor market — and even the economy — is cooling. Quincy Krosby, chief global strategist at LPL Financial, wrote: “The lower unemployment rate presents a dilemma versus the downward revisions, as the downward revision pattern suggests that Economic conditions are getting tougher. .SPX 5D mountain The S&P 500 and the Nasdaq posted weekly losses on Friday, falling more than 4% and 5% respectively. The Dow Jones Industrial Average fell more than 2% for the week. Rob Williams, chief investment strategist at Sage Advisory, believes the Fed will avoid a hard landing, but said the cooling economy has prompted him to diversify his stock allocation, insisting on investments that are resilient. Quality companies in a weakening economy, rather than a handful of high-growth tech stocks dominating the cap-weighted S&P 500, “I don’t think we’re going to have a hard landing, but we’re not going to have a hard landing either – that’s what it’s about. What the stock market thinks. I think we’re going to be uncomfortably close to ground, which means we’re going to be below 1.5% GDP quarterly, which is going to worry some people,” Williams said. “Given what’s going on with the (price-to-earnings) ratio, they’re more susceptible.” He prefers the bond market to the stock market. Williams said it is clear that the Fed will significantly lower interest rates in the coming months, which may make him optimistic about U.S. Treasuries over the next six to 12 months. “People forget that a rate cut is not about 50 basis points or 25 basis points, it’s about where the bond market is going over the next year and a half, and the federal funds rate is probably going to be 3 percent,” Williams said. “So that’s more important. Numbers, because that means interest rates are falling and if you own more bonds, you’re locking in higher yields now and you can participate in that.” U.S. Treasury yields fell on Friday after the August jobs report. , with the 10-year bond yield slightly lower at 3.71%. Yield is inversely proportional to price. CPI, PPI The Federal Reserve will enter a pause period next week before its policy meeting on September 17th and 18th. That said, two key inflation reports next week will likely inform the central bank’s next policy steps. August’s consumer price report and producer price report, due out on Wednesday and Thursday respectively, are expected to show that the trend of easing inflation remains intact. However, any sign of a narrative shift has the potential to roil stocks. “We just need to avoid any negative surprises,” said John Belton, portfolio manager at Gabelli Funds. FactSet expected CPI to fall back to 2.6% on the year last month. That would be down from July’s 2.9% increase. The core Consumer Price Index (CPI), which excludes volatile food and energy prices, is expected to remain unchanged at 3.2%. Economists surveyed by FactSet forecast that PPI is expected to fall to 1.7% from 2.2%. The first presidential debate between Vice President Kamala Harris and former President Donald Trump also takes place next week, with traders keeping a close eye on the event as the candidates outline their economic policies. Apple will host its “It’s Glowtime” event, where the tech giant is expected to launch the iPhone 16. However, analysts are lukewarm on the stock. One week ahead calendar all times are Eastern Time. Monday, Sept. 9, 10 a.m. Wholesale Inventory Ending (July) 3 p.m. Consumer Credit (July) Earnings: Oracle Apple’s “It’s Glowtime” event Tuesday, Sept. 10, 6 a.m. NFIB Small Business Index ( August) Goldman Sachs Communacopia and Technology Conference US Presidential Debate Wednesday, September 11, 8:30 AM Consumer Price Index (August) 8:30 AM Hourly Earnings Final Results (August) 8:30 AM Average Work Week Final Results (August) Thursday, September 12, 8:30 AM Continuing jobless claims (08/31) 8:30 AM Initial jobless claims (09/07) 8:30 AM Producer Price Index (August) PM 2 p.m. Treasury Budget (August) Gains: Adobe, Kroger Friday, Sept. 13, 8:30 a.m. Export Price Index (August) 8:30 a.m. Import Price Index (August) 10 a.m. Michigan mood begins Value (September)
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