Closing Market Summary: Stocks Slip Following Jobs Report, Tariff TalkStocks slipped on Friday, giving the bears a clean sweep for the abbreviated week, after the Employment Situation report for August showed a stronger-than-expected increase in average hourly earnings and after President Trump threatened yet another round of tariffs on Chinese goods. The S&P 500 finished lower by 0.2%, while the Dow Jones Industrial Average and the Nasdaq Composite lost 0.3% apiece.
The Employment Situation report for August crossed the wires early Friday morning, showing a 0.4% rise in average hourly earnings (Briefing.com consensus +0.2%), which pushes the year-over-year rate to 2.9% -- its highest level since May 2009. That ignited fears that inflation may be picking up more than expected, as that may force the Fed to be more aggressive in raising rates.
Equity futures dipped lower following the release, but the market didn't stay down for long, with the S&P 500 fully reclaiming its opening loss of 0.4% about an hour into the session. However, President Trump sent stocks back to their opening levels around midday after saying that he's got another tranche of tariffs on $267 billion of Chinese goods "ready to go" if China retaliates to a U.S. bid to impose a tariff on an additional $200 billion of Chinese goods (which hasn't happened yet, but is expected by many to come to fruition soon).
In the end, the S&P 500, which traded as high as +0.2% and as low as -0.5%, settled near the middle of its trading range. 10 of 11 S&P sectors finished in negative territory, with health care (+0.2%) being the lone exception. The lightly-weighted utilities (-1.2%) and real estate (-1.2%) spaces were the worst performers, but losses were modest in general, with no other group dropping more than 0.5%.
The top-weighted technology space outperformed for much of the day, but eventually finished in line with the broader market, losing 0.3%. Within the space, Broadcom (AVGO 232.58, +16.61) rallied 7.7% after reporting better-than-expected earnings for its fiscal third quarter. Meanwhile, Apple (AAPL 221.30, -1.80) dropped in the late afternoon, settling lower by 0.8%, following headlines that the Trump administration's proposed tariff list may cover a wide range of the company's products.
In other corporate news, electric automaker Tesla (TSLA 263.24, -17.71) tumbled 6.3%, hitting a five-month low, after its Chief Accounting Officer announced his resignation after just a month with the company and following headlines that its Chief People Officer will not be returning from her leave.
Looking at other markets, U.S. Treasuries sold off on Friday after the release of the August jobs report, sending yields higher across the curve. The yield on the Fed-sensitive 2-yr note jumped six basis points to 2.69%, and the yield on the benchmark 10-yr note also rose six basis points, closing at 2.94%. Elsewhere, the U.S. Dollar Index rallied 0.4% to 95.34, and WTI crude futures slipped 0.1% to $67.76/bbl.
Reviewing the Employment Situation report for August, which was Friday's only economic report:
- August nonfarm payrolls increased by 201,000 while the consensus expected an increase of 187,000. The prior month's increase was revised to 147,000 from 157,000. Nonfarm private payrolls rose by 204,000 while the consensus expected an increase of 175,000. The previous month's increase was revised to 153,000 from 170,000. Average hourly earnings increased 0.4% (consensus +0.2%), while the previous month's increase was left unrevised at 0.3%. The average workweek was reported at 34.5 (consensus 34.5). The unemployment rate stayed at 3.9% (consensus 3.9%).
- The wage growth should be regarded as good news, yet the key takeaway for the market is that it will keep the Fed in a tightening gear, which most likely includes two more rate hikes before the year is done.
Looking ahead, investors will receive just one economic report, the Consumer Credit report for July, on Monday.
- Nasdaq Composite +14.5% YTD
- Russell 2000 +11.6% YTD
- S&P 500 +7.4% YTD
- Dow Jones Industrial Average +4.8% YTD
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