Market Summary
U.S. equities closed modestly lower on Friday, September 4, capping a volatile week as a stronger-than-expected August Employment Report reignited expectations for a September rate hike. The S&P 500 fell 29.11 points (-0.38%) to 7,718.60, the Dow shed 271.86 points (-0.51%) to 53,414.25, and the Nasdaq Composite slipped 77.07 points (-0.29%) to 26,528.04. Small- and mid-caps bucked the weakness, with the Russell 2000 (+0.3%) and S&P Mid Cap 400 (+0.1%) finishing higher on the day.
The August jobs report was the dominant driver, with nonfarm payrolls surging 162,000 versus a consensus of just 45,000 and the unemployment rate falling to 4.1% from an expected 4.2%. The CME FedWatch Tool pushed the implied probability of a 25-basis-point hike at the September 15-16 FOMC meeting to roughly 60%, up from about 50% a day earlier, sending Treasury yields higher and pressuring rate-sensitive equities. Beneath the headline index moves, sector performance was sharply divided: semiconductor strength lifted the information technology sector (+0.2%) and helped the PHLX Semiconductor Index rally 3.4%, while software names slumped (iShares GS Software ETF -2.2%) following Adobe’s post-CEO-announcement selloff. Consumer discretionary (-1.3%) was the weakest major group as Tesla and lululemon both suffered steep declines.
For the week, the major averages finished little changed despite substantial intraday volatility tied to surging oil prices, elevated Treasury yields, and shifting Fed expectations. The S&P 500 gained 0.1% and the Nasdaq rose 0.4% for the week, while the DJIA slipped 0.3%. Attention now turns to next week’s August PPI and CPI reports, which will be pivotal in shaping expectations heading into the September FOMC decision.
Market Snapshot
| Index | Level | Change | % Change |
|—|—|—|—|
| Dow Jones | 53,414.25 | -271.86 | -0.51% |
| Nasdaq Composite | 26,528.04 | -77.07 | -0.29% |
| S&P 500 | 7,718.60 | -29.11 | -0.38% |
Breadth (NYSE): Advancers 1,321 | Decliners 1,369 | Volume 987.83 mln
Breadth (Nasdaq): Advancers 2,532 | Decliners 2,338 | Volume 6.54 bln
WaveFinder Market Breadth (as of 09/04):
- Primary Sentiment: Bullish | 4% Sentiment: Bullish | 40 SMA Sentiment: Neutral
- Primary Bulls 795 / Bears 535
- 4% Bulls 206 / Bears 104
- Stocks Above 20 SMA: 23%
- Stocks Above 40 SMA: 49.91%
- 9-Month Bulls 24 / Bears 7 (30% Follow-Through)
Sector Performance
Ranked from strongest to weakest based on Briefing.com Industry Watch and reported sector moves:
1. Industrials +0.4% — boosted by strength in semiconductor-related names
2. Information Technology +0.2% — sharp internal split between surging semiconductors and falling software
3. Financials -0.8% — notable laggard, weighed down by credit-bureau selloffs
4. Communication Services -0.9% — weakness across large-cap components
5. Consumer Discretionary -1.3% — Tesla and lululemon declines weighed heavily
6. Energy — flagged weak in Industry Watch (no daily % disclosed)
7. Materials — flagged weak in Industry Watch (no daily % disclosed)
8. Health Care — flagged weak in Industry Watch (no daily % disclosed)
9. Real Estate — flagged weak in Industry Watch (no daily % disclosed)
10. Consumer Staples — flagged weak in Industry Watch (no daily % disclosed)
11. Utilities — not specifically addressed in today’s commentary
Note: The PHLX Semiconductor Index rallied 3.4% while the iShares GS Software ETF fell 2.2%, underscoring a significant divergence within the Technology sector.
Key Earnings & Movers
- Sandisk (SNDK) $1,740.00, +$185.01 (+11.90%) — Surged on stronger DRAM/NAND pricing, robust server demand, and a technical rebound.
- Fair Isaac (FICO) $932.26, -$186.67 (-16.68%) — Tumbled after FHFA Director Bill Pulte said Fannie Mae/Freddie Mac will allow lenders to use VantageScore, threatening FICO’s mortgage-scoring dominance.
- lululemon athletica (LULU) $100.61, -$21.16 (-17.38%) — Plunged after disappointing Q2 results and a second consecutive FY27 guidance cut.
- Tesla (TSLA) $354.08, -$22.28 (-5.92%) — Gave back Thursday’s rally.
- Adobe (ADBE) $266.51, -$19.24 (-6.73%) — Fell after naming a new CEO.
- Equifax (EFX) $177.05, -$12.04 (-6.37%) — Dropped alongside FICO on credit-scoring competition concerns.
- TransUnion (TRU) $79.88, -$5.04 (-5.94%) — Also pressured by Pulte’s comments on a potential “bi-merge” credit-reporting system.
- Oracle (ORCL) $158.83, +$4.79 (+3.11%) — Set to report earnings after Thursday’s close next week.
- DocuSign (DOCU) — Traded higher after a Q2 beat, with IAM platform adoption reaching 15.1% of ARR and raised FY27 ARR growth guidance to +8.5-9.0%.
Stock Spotlight
lululemon athletica (LULU) was one of the session’s most significant movers, plunging $21.16 (-17.38%) to $100.61 — falling below the $100 mark for the first time in several years. While Q2 (July) EPS of $2.92 topped prior guidance (aided by a $0.86 tariff-refund benefit), revenue fell 4% year-over-year to $2.42 billion, missing expectations. Overall comparable sales declined 9% (10% in constant currency), driven by steep traffic pressure across both the Americas (-12% comps) and international markets, with China swinging from a growth driver to a liability (comps -8% in CC).
The bigger blow was guidance: LULU issued a well-below-expectations Q3 EPS and revenue outlook and cut its FY27 guidance for the second consecutive quarter — adding to investor unease ahead of an upcoming CEO transition. Gross margin of 60.5% (+200 bps yr/yr) was flattered by a 560-bp tariff-refund benefit, masking underlying pressure from markdowns and fixed-cost deleverage; operating margin still declined 190 bps to 18.8%. Management is responding with increased H2 marketing investment and a more aggressive product-chase strategy (~20% higher chase volume), but the market’s reaction signals skepticism that these measures will reverse the traffic-driven sales erosion in the near term.
Bond Market & Treasuries
U.S. Treasuries sold off Friday after the stronger-than-expected jobs report reversed an initially modest rally. Yields hit session highs immediately following the 8:30 a.m. data release before recovering a portion of the move, then drifted higher again into the close.
- 2-Year: 4.38% (+5 bps day, +3 bps week)
- 3-Year: 4.45% (+4 bps day, +5 bps week)
- 5-Year: 4.55% (+4 bps day, +7 bps week)
- 10-Year: 4.78% (+2 bps day, +6 bps week)
- 30-Year: 5.25% (unchanged day, +4 bps week)
The 2s10s spread widened by 3 bps this week to 40 bps, with relative weakness concentrated in the belly of the curve. The CME FedWatch Tool now assigns roughly a 60% probability to a September rate hike, up from about 50% a day earlier. Cleveland Fed President Beth Hammack (a voting member) reinforced the hawkish tone, stating inflation remains too high and “it’s time to act.” Separately, the U.S. Treasury sanctioned Golden Global investment bank over Iran-related dealings, and Norway’s sovereign wealth fund is reportedly considering trimming its U.S. Treasury holdings.
Commodities
- WTI Crude Oil: $91.50/bbl, +$0.15 (+0.2%) — gained roughly 10% for the week amid U.S.-Iran tensions; this week’s net gain narrowed to $8.12/bbl by Friday.
- Gold: $4,476.00/ozt, -1.4%
- Copper: $6.68/lb, +0.2%
- Silver: Not disclosed in available data
Overseas Markets
Specific index-level performance for Asian and European markets was not disclosed; however, several key economic and policy developments were noted:
- Japan: July Household Spending rose 0.5% m/m (expected +2.6%; prior -6.4%) but fell 3.6% yr/yr (expected -1.6%; prior -3.3%). Finance Minister Katayama confirmed the FY27/28 budget will reach a record JPY 143 trillion.
- South Korea: July Current Account surplus totaled $42.08 billion (prior surplus $49.73 billion).
- Eurozone: July Retail Sales fell 0.6% m/m (expected +0.3%; prior +0.2%) but rose 0.6% yr/yr (expected +1.1%; prior +1.4%).
- Germany: July Factory Orders rose 2.5% m/m (expected +0.3%; prior +3.7%).
- Italy: July Retail Sales fell 0.4% m/m (expected +0.2%; prior -0.2%) but rose 0.8% yr/yr (prior +3.1%).
- U.K.: Reportedly moving to approve new North Sea oil drilling efforts.
- Corporate: Volkswagen’s supervisory board approved a plan for up to 50,000 additional job cuts.
Economic Data
August Employment Situation Report (released 8:30 a.m. ET):
- Nonfarm Payrolls: +162,000 (Briefing.com consensus +45,000); July revised to +21,000 from -23,000; June revised to +31,000 from +20,000
- 3-Month Average Payrolls: 71,000, up from 38,000
- Private Sector Payrolls: +127,000 (consensus +45,000)
- Unemployment Rate: 4.1% (consensus 4.2%; prior 4.1%)
- Persons Unemployed 27+ Weeks: 27.0% of unemployed, up from 25.5% in July
- U6 Underemployment Rate: 7.7%, down from 7.9%
- Average Hourly Earnings: +0.3% m/m (consensus +0.2%); +3.1% yr/yr, down from +3.2%
- Average Workweek: 34.4 hours (consensus 34.3; prior 34.3)
- Labor Force Participation Rate: 61.6%, up from 61.4%
Market Impact: The headline strength drove a swift repricing of Fed rate-hike odds, with the September hike probability jumping to roughly 60% from about 50% the prior day. However, softer underlying details — the modest 71,000 three-month payroll average, decelerating wage growth, and rising long-term unemployment — tempered the case for an assured hike, leaving the market to await the August CPI report for further clarity.
Looking Ahead
- Monday, September 7: Bond and equity markets closed for Labor Day
- Tuesday, September 8: August NFIB Small Business Optimism Index (Briefing.com consensus 99.3; prior 99.8) at 6:00 a.m. ET; $58 billion 3-year Treasury note auction
- Week Ahead: August Producer Price Index (consensus +0.4%; prior 0.0%) and August Consumer Price Index (consensus +0.4%; prior +0.1%) will be the key catalysts for reshaping September FOMC rate-hike expectations ahead of the September 15-16 meeting
- Earnings: A relatively light week for earnings; Oracle (ORCL) reports after Thursday’s close
- Fed Watch: Markets will continue parsing commentary from FOMC officials as the probability of a September hike (currently ~58-60%) remains fluid heading into the CPI release