Wall Street appears to be struggling with what August’s mixed jobs data means exactly for the markets. Stocks fell on Friday, with the S&P 500 posting its worst week of the year after the nonfarm payrolls report had both good and bad news. On the one hand, the unemployment figure fell slightly. On the other hand, the number of job headlines missed expectations. In addition, job growth for the previous two months saw significant downward revisions. One thing, however, became clear to some investors from this latest jobs report: The labor market — and by extension, the economy — is cooling. “The lower unemployment number versus downward revisions presents a dilemma given the pattern of downward revisions that suggest more severe economic conditions are taking hold,” wrote Quincy Krosby, chief global strategist at LPL Financial. .SPX 5D mountain S&P 500 On Friday, the S&P 500 and Nasdaq Composite posted weekly losses, down more than 4% and 5%, respectively. The Dow Jones Industrial Average ended the week down more than 2%. ‘Uncomfortably close to the ground’ Rob Williams, chief investment strategist at Sage Advisory, believes the Fed will avoid a hard landing, but said the cooling economy is causing him to diversify his stock allocation. Instead of the market-cap-weighted S&P 500, which is dominated by a few high-tech stocks, he would prefer to broaden his exposure to health care and financials, sticking to quality companies that can weather any economic softness. “I think we’re not going to get a hard landing, but we’re not going to get a no-landing — and that’s what the stock market thinks. I think we’re going to get uncomfortably close to the ground, which means we’re going to have some quarters of GDP below 1.5 % and that will worry some,” Williams said. “And given where [price-to-earnings multiples] They’re, they’re a little bit more vulnerable.” He prefers buying bonds over stocks here. Williams said what’s clear is that the Fed will cut interest rates significantly from where they’ve been in the coming months, a possibility that makes him bullish on Treasury over the next six to 12 months ‘People forget it’s not whether they’re going to cut 50 or 25 [basis points]is we’re heading into the next year and a half in the bond market and Fed funds are probably heading toward 3%,” Williams said. you’ve got more bonds locking in higher yields now and you can participate in that.” Treasury yields fell on Friday after the August jobs report, with the 10-year yield slightly lower at 3.71%. Yields move inversely on prices CPI, CPI Fed to move into blackout period ahead of its policy meeting on September 17-18 Producer price reports – due on Wednesday and Thursday, respectively – are expected to show that the trend easing inflation remains intact, however, any sign of a change in the narrative has the potential to send stocks down,” said John Belton, portfolio manager at Gabelli Funds. The CPI is expected to have slipped to 2.6% on a year-over-year basis last month , per FactSet.That would be lower than a 2.9% increase in July.The core CPI, which strips out volatile food and energy prices, is expected to be unchanged at 3.2%. The PPI is also expected to have eased to 1.7% from 2.2%, economists polled by FactSet forecast. Next week will also see the first presidential debate between Vice President Kamala Harris and former President Donald Trump, an event traders will be watching closely as the candidates outline their economic policies. Apple will also have its “It’s Glowtime” event where the tech giant is expected to launch the iPhone 16. Investors in the world’s largest public company are hoping for new details about Apple’s artificial intelligence effort, called “Apple Intelligence.” Analysts, however, are bullish on the stock. Week Ahead Calendar All times ET. Monday, September 9, 10 a.m. Wholesale stocks final (July) 3 p.m. Consumer Credit (July) Earnings: Oracle Apple “It’s Glowtime” Event Tuesday, September 10, 6 a.m. NFIB Small Business Index (August) Goldman Sachs’ Conference Communicopia and Tech Chair panel discussion Wednesday, September 11, 8:30 am. Consumer Price Index (August) 8:30 am Final Hourly Earnings (August) 8:30 AM Midweek Work Final (August) Thursday September 12th 8:30am. Continuing Jobless Claims (08/31 ) 8:30 AM Initial Claims (07/09) 8:30am Producer Price Index (August) 2 p.m. State Budget (August) Earnings: Adobe , Kroger Friday, September 13 8:30 am Export Price Index (August) 8:30 am Import Price Index (August) 10am Michigan Preliminary Sentiment (September)
