Ringside · Post-Bell · September 4
- Employers hired 162,000, tripling the 53,000 consensus, and hike odds jumped to 62%.
- Fair Isaac fell 16.7% to $932.26 after the housing regulator cleared VantageScore for every lender.
- Two-year yields rose three basis points to 4.37% while the thirty-year fell one; markets shut Monday for Labor Day.
Indexes
The August employment report did to this market what a strong number does when the argument is about a rate increase rather than a cut. The economy created 162,000 jobs against the 53,000 economists surveyed by Dow Jones had penciled in, June and July were revised up by a combined 55,000, and the unemployment rate stayed at 4.1%. The S&P 500 opened at 7,750.19, never traded above that level again, and closed 0.38% lower at 7,718.60, while the Dow gave back 271.86 points of Thursday's 624-point advance. Short-term interest-rate futures finished the day implying about a 62% chance of an increase on September 16, per Reuters, against roughly 55% beforehand. What kept the session orderly was where the selling did not go: technology gained 0.70%, the Nasdaq 100 closed higher, and the Russell 2000 added 0.25% to 2,975.65, which is not how small caps usually greet a hawkish employment report.
| Index | Close | % Chg | Session range |
|---|---|---|---|
| S&P 500 | 7,718.60 | -0.38% | 7,706.12 – 7,750.19 |
| Nasdaq Composite | 26,506.99 | -0.29% | 26,444.84 – 26,628.58 |
| Dow Jones Industrial Average | 53,414.25 | -0.51% | 53,289.88 – 53,635.35 |
| Russell 2000 | 2,975.65 | +0.25% | 2,951.04 – 2,976.66 |
| Volatility index (VIX) | 14.53 | +1.47% | 13.80 – 14.58 |
Sector Heat Map
| Sector (ETF) | Close | % Chg |
|---|---|---|
| Technology (XLK) | $187.28 | +0.70% |
| Industrials (XLI) | $175.27 | +0.41% |
| Utilities (XLU) | $43.08 | +0.12% |
| Materials (XLB) | $52.44 | -0.34% |
| Real Estate (XLRE) | $43.93 | -0.72% |
| Financials (XLF) | $58.10 | -0.79% |
| Consumer Staples (XLP) | $84.58 | -0.80% |
| Energy (XLE) | $64.06 | -0.87% |
| Health Care (XLV) | $171.45 | -1.04% |
| Communication Services (XLC) | $112.03 | -1.19% |
| Consumer Discretionary (XLY) | $114.91 | -1.33% |
Three sectors rose and eight fell, and the survivors are not the ones a rate increase usually rewards: semiconductors carried technology higher while financials, the group that normally welcomes richer short rates, gave up 0.79%. Consumer discretionary was worst, weighed by Lululemon's close at a twelve-month low after Thursday evening's forecast cut.
In the News
Rates, FX, Commodities
The curve did two different things at once. Two-year notes finished three basis points cheaper at 4.37%, back near the 4.39% they reached on Tuesday, while the thirty-year went the other way and gave up a basis point. Short rates rising while long rates fall is the classic signature of a central bank believed to be getting ahead of inflation rather than chasing it.
| Treasury | Yield | Chg | Note |
|---|---|---|---|
| 2-Year | 4.37% | +3 bp | 4.39% on Tuesday |
| 5-Year | 4.54% | +2 bp | |
| 10-Year | 4.78% | +1 bp | |
| 30-Year | 5.24% | -1 bp | Only long maturity to rally |
| 2s10s spread | 41 bp | -2 bp |
| FX / Commodity | Level | % Chg | Note |
|---|---|---|---|
| Dollar index (DXY) | 99.16 | +0.11% | |
| EUR/USD | 1.1616 | -0.09% | |
| USD/JPY | 156.24 | +0.08% | |
| WTI Crude (Oct) | $91.29 | — | Up 10.4% on the week |
| Brent Crude (Nov) | $95.85 | — | Up 7.6% on the week |
| Gold (Dec) | $4,477 | — | |
| Natural Gas | $2.95 | — |
Crude settles at half past two in New York and gold an hour before that, so Friday's crude and bullion quotes are late-session prices rather than the settlement price. Reuters puts the week at 10.4% for West Texas Intermediate and 7.6% for Brent, with the seven OPEC+ producers meeting Sunday on October quotas. Gold fell on the same repricing that lifted the front of the curve; a higher policy rate raises the cost of holding an asset that pays nothing.
Technicals
A 0.38% decline leaves the S&P 500 1.0% under its best close in a year and still above a twenty-day average at 7,708.70, which is the line that matters at this distance. Only the Nasdaq 100 gained among the large-cap benchmarks, ending at 29,544.15, some 3.6% below its own year-high and clear of a fifty-day average at 29,229.10.
Small caps remain the exception. The Russell 2000 gained 0.25% to 2,975.65 and is still thirteen points beneath a fifty-day average of 2,988.49, the only major American index below that line. Its constituents refinance at the front of the curve, which is exactly where Friday's selling landed.
In Treasuries the two-year at 4.37% has rebuilt most of what Christopher Waller's remarks took out of it on Thursday, and the five-year at 4.54% is a basis point off Tuesday's peak. The ten-year at 4.78% has confirmed none of it.
Breakouts and Breakdowns
Breakouts
Dell Technologies (DELL) closed at $524.14, a year-high finish and 23% above the $425.00 it registered on Tuesday, when it had just lost a fifty-day average. Three sessions rebuilt a month.
NVIDIA (NVDA) added 0.84% to $230.36, within 2.3% of a year-high at $235.74 and well clear of a fifty-day average at $210.57. It is most of the reason the Nasdaq 100 finished green while the Dow lost 271 points.
Breakdowns
Lululemon (LULU) ended at $100.61, its weakest close in a year, after Thursday evening's forecast cut. Nothing in the past year sits below it.
Fair Isaac (FICO) closed at $932.26 having traded as low as $885.00 during the session. The shares have halved from a high of $1,879.55.
Levels, Revisited
Dell (DELL) was the week's reversal: it lost a fifty-day average at $434.22 on Tuesday and closed Friday at $524.14.
Financials (XLF) touched $58.60 on Thursday without closing there, and Friday's selling took the fund back to $58.10.
Schlumberger (SLB) has given the whole Monday breakout back: $57.51 is within pennies of the $57.33 the move started from.
Howmet Aerospace (HWM) was sitting on a 200-day average of $244.45 on Monday. The average held and the shares closed at $259.27.
Take-Two (TTWO) at $214.69 kept sliding under its 200-day, with the $187.63 low still untouched.
Credo (CRDO) at $170.57 remains beneath the 200-day average it surrendered on Wednesday.
Top Movers
Gainers
SanDisk (SNDK) rose 11.90% to $1,740.00, the largest gain among big-capitalisation names, on a memory market that keeps tightening as artificial-intelligence buildouts absorb supply. No company announcement sat behind it; the bid belongs to the whole group. KLA (KLAC) closed at $185.60, up 7.32%, for much the same reason.
Astera Labs (ALAB) gained 9.75% to $310.40, recovering from the lows it set midweek.
Losers
Guidewire Software (GWRE) lost 19.93% to $162.42 after Thursday evening's results, which beat on both lines. Fourth-quarter revenue rose 15% to $411 million, adjusted earnings came to $0.99 a share, and annual recurring revenue gained 19% in constant currency to $1.237 billion. The damage came from the outlook: fiscal 2027 recurring revenue of $1.45 billion to $1.46 billion works out to 18% growth at the midpoint, and the current-quarter guide landed below what analysts had modelled. A software company decelerating by one point is not in trouble; a software company priced for acceleration is a different matter.
Fair Isaac (FICO) fell 16.68% to $932.26 after Bill Pulte, who runs the Federal Housing Finance Agency, instructed Fannie Mae and Freddie Mac to approve VantageScore for all lenders effective immediately. Pulte's stated grievance is price: he accused the company of raising the per-person cost of a credit score by 1,800% since 2020, and VantageScore's owners advertise 99 cents against the ten dollars or more Fair Isaac charges. The exposure is concrete rather than reputational, since mortgage originations supplied 71% of business-to-business scores revenue in the company's fiscal third quarter. How much of that volume actually moves depends on lenders who are now permitted, not required, to switch.
Tesla (TSLA) gave up 5.92% to $354.08, its worst session in six weeks, after Thursday night's Cybercab launch in Austin. Elon Musk did not attend, executives spoke for about a quarter of an hour, and questions on pricing, manufacturing rate and deployment schedule went unanswered. Regulators then opened an audit query into whether the two-seater was properly self-certified for public roads, and Wells Fargo told clients the Austin service faces early execution problems. The stock had risen 5.4% on Thursday in anticipation.
Macro Calendar
One report mattered on Friday, and it arrived roughly three times the size Wall Street had modelled.
| Release | Actual | Forecast | Prior |
|---|---|---|---|
| Nonfarm payrolls, August | +162,000 | +53,000 | +21,000 |
| Unemployment rate | 4.1% | 4.1% | 4.1% |
| Average hourly earnings, y/y | +3.1% | +3.0% | +3.2% |
| Canada employment, August | -42,000 | +15,000 | +75,000 |
The revisions carry as much weight as the headline. July's reported loss of 23,000 jobs became a gain of 21,000 and June rose to 31,000, which converts a summer that looked like stalling into one that merely slowed. Average hourly earnings reached $37.75, up 3.1% against a year earlier and a tenth above forecast. Bars and restaurants took the biggest single share of the hiring; information services shed positions.
Notable Earnings This Session
A holiday weekend empties both ends of the calendar.
Pre-Open
No company of size reported into the open.
Post-Close
The evening is bare as well. GameStop (GME) opens next week's slate on Tuesday, having guided to quarterly net income of $290 million to $310 million against $168.6 million a year ago.
Drivers
- Producer prices arrive Thursday and consumer prices Friday, the last two inflation readings ahead of the September 15-16 policy meeting. Bill Adams of Fifth Third Commercial Bank told TheStreet the pair "have the power to decide whether the Fed hikes or holds." The case for waiting now rests entirely on the core measure behaving while energy does not, and this week gave the doves nothing to work with on either count.
- The seven OPEC+ producers that unwound the voluntary cuts meet on Sunday to set October quotas. Reuters reports the group is likely to leave policy unchanged, which would be its first refusal to answer this rally with barrels after August's 188,000-a-day increase for September.
- American markets are closed Monday for Labor Day, so the OPEC+ decision and anything that happens around Hormuz over the weekend get absorbed in a single session on Tuesday. The two-year note goes into that break at 4.37%.