For last week, the S&P 500 Index was +0.4%, the Dow Jones Industrials -0.3%, and the NASDAQ +1.0%. The Communication Services, Consumer Discretionary, and Consumer Staples sectors led the S&P 500 Index for the week, while the Energy, Financials, and Utility sectors lagged. The 10-year U.S. Treasury note yield decreased to 4.089% at Friday’s close versus 4.224% the previous week.
A weaker Employment Situation report added evidence to the case that the Federal Reserve could ease monetary policy at its September meeting. The August report showed 22,000 net new jobs created versus an expectation of 78,000. The August unemployment rate rose to 4.3% versus 4.2% in July.
This week provides data points on inflation with the August Producer Price Index (PPI) scheduled for Wednesday and Consumer Price Index (CPI) scheduled for Thursday. Inflation concerns among some Federal Reserve members is likely the last sticking point holding back a policy change on interest rates. CME Fed funds futures are now projecting three 0.25% rate cuts for 2025 starting at the September 17th Federal Open Market Committee (FOMC) meeting. One 0.25% cut is also projected for the first quarter of 2026.
We are transitioning between earnings periods this week. Two companies in the S&P 500 Index are scheduled to report second quarter earnings results, and one company is scheduled to report third quarter results. Second quarter S&P 500 Index earnings growth should be 12.0% with revenue growth of 6.5%. Third quarter S&P 500 Index earnings growth is forecast at 7.5% with revenue growth of 6.1%. Full-year 2025 earnings are expected to grow by 10.6% with revenue growth of 6.0%.
In our Dissecting Headlines section, we look at where jobs are and are not.
Financial Market Update
Dissecting Headlines: Where Jobs Are and Are Not
Restrictive monetary policy and tariff uncertainty has caused the labor market to cool over the past few months. Net new jobs in the United States grew by 88,400 over the past three months, or an average of just over 29,000 per month. This is a significant slowing versus the monthly average of 139,750 per month over the past two years.
Over the past three months, jobs have been lost in all major goods producing categories to include manufacturing
(-31,000 jobs), mining and logging (-13,000) and construction (-10,000). Service categories that have seen job losses over the past three months include professional and business services (-51,000 jobs), wholesale trade (-32,100) and information technology (-15,000).
Areas of job growth over the past three months include health services (+174,000 jobs), leisure and hospitality (+29,000), transportation and warehousing (+13,700), retail (+12,700), and other services (+11,000). Other services includes repair, personal, and in-home services , as well as churches, nonprofit organizations, and professional associations. New jobs in federal, state, and local government have been flat over the past three months.
For the first time since April 2021, there are more unemployed individuals than job openings.