Stocks Drop into the Weekend – Nasdaq Down 1.15%
US stock markets fell on Friday as tech stocks continued to weigh on indexes. The Dow closed down 0.20% at 45,544, while the more tech-heavy indices suffered more, with the S&P down 0.64% to 6,460 and the Nasdaq off 1.15% to 21,455. The Core PCE data came in largely on expectations, with the market still pricing in a September rate cut, although yields were mixed and the dollar close to unchanged. The 2-year yield was down 1.2 basis points to 3.617%, the 10-year yield up 2.5 basis points to 4.228%, and the DXY up just 0.04% to 97.86. Oil prices drifted lower again as traders factored in the end of summer in the US and increased supply expectations, with Brent off 0.74% to $67.48 and WTI down 0.91% to $64.01 a barrel. Gold pushed higher to lock in its best month since April, up 0.90% on the day to $3,447.95 an ounce.
US Jobs Numbers in Focus This Week
There are four separate US jobs updates this week and, given the impact that last month’s data had on Fed interest rate expectations, there will be a strong focus on this week’s results. The market is pricing in a 90% chance of a 25-basis point cut from the Fed in a couple of weeks’ time, and it feels like only a dramatic turnaround in the jobs data could stop that from happening. However, this week’s numbers could go a long way in determining whether we have another cut (or more) before the end of the year. The JOLTS Job Openings (exp. 7.24m), the ADP Non-Farms (exp. 71k), and the Weekly Unemployment Claims (exp. 229k) will all have their part to play, but of course, it will be the big employment numbers on Friday that could really move the dial. Non-Farm Payrolls are expected to show a 74k increase in July, with Average Hourly Earnings steady at +0.3% and the Unemployment Rate expected to tick up to 4.3%. Anything significantly off these expectations could see huge moves in the market. There’s plenty of water to come under the bridge in the next few trading days, but expect focus on US jobs data to increase as we progress through the week.
Quiet Calendar Start to the Week Again
It is a quiet start to the trading week on the macroeconomic calendar, with a plethora of tier-3 numbers due out but nothing of higher level that is likely to move the market. Geopolitical updates are expected to add a bit of spice to the market later in the day, although there was little reaction at the Asian open to news late on Friday that an appeals court in Washington, DC, ruled the majority of President Trump’s tariffs to be illegal. Asian indices will likely start on the back foot today after the declines on Wall Street on Friday, and traders are expecting to see markets skewed to the downside as the day progresses. There is a raft of final Manufacturing PMI numbers due out in the European session, but these tend to have a much lower impact than the Flash data that preceded them a couple of weeks ago, unless there is a significant change. The New York session could be interesting today with both US and Canadian markets closed for Labor Day holidays. Traders are expecting markets to be quiet, although they are aware that any geopolitical news could have an increased impact due to the lower liquidity.
