Stocks ended Friday’s session mixed following the August employment report’s release, as investors digested the weak-than-expected payroll additions. The Nasdaq had a choppy session and closed the day lower.
Here were the main market moves, as of market close:
S&P 500 (^GSPC): +0.09%, or 2.71 points
Dow (^DJI): +0.26%, or 69.31 points
Nasdaq (^IXIC): -0.17%, or 13.75 points
Crude oil (CL=F): +0.48% to $56.57 per barrel
Gold (GC=F): -0.75%, or $1,514 per ounce
The ongoing U.S.-China trade war continued to whipsaw markets, but all three of the major indices ended the week higher. September was off to a rocky start until top negotiators of the world’s two largest economies spoke on the phone Thursday and agreed to hold high-level trade talks in early October. To end the week, the Dow rose 394 points, while both the S&P 500 and Nasdaq increased about 1.8%.
Both the August jobs report and Fed Chair Jerome Powell’s speech will be the focal points for investors Friday. August’s jobs report comes at a critical time, as trade tensions, slowing global growth and overall uncertainty keep investors on edge. August was a brutally volatile month for the stock market with wild swings in both directions. In addition, with multiple brief inversions of the yield curve during the month, fears of a possible recession sent market watchers into a frenzy.
Jobs, jobs, jobs
The U.S. economy added 130,000 nonfarm payrolls in August, which was fewer-than the 160,000 payroll additions expected by economists. The unemployment rate held steady at 3.7%.
July’s employment figure was revised to 159,000, down from the 164,000 positions previously reported. The labor force participation rate ticked higher to 63.2%. The manufacturing sector added 3,000 positions in August.
The retail sector lost 11,000 jobs during the month. Retail payrolls fell for the seventh consecutive month, the longest losing streak since 2009.
“Amid the volatility of financial markets seeming to mirror the rest of the world, the U.S. job market has remained a veritable pillar of stability,” Mark Hamrick, Bankrate.com’s senior economic analyst, wrote in an email to Yahoo Finance. “In terms of relatively stability, the upcoming August employment reading should be no exception, with the emphasis on ‘should.’ The key question is whether the U.S. economy continues to grow in the face of these headwinds.”
The BLS report comes after a new report from ADP Research Institute and Moody’s on Thursday showed that job growth in the U.S. private sector was better than economists’ expectations in August . The U.S. private sector added 195,000 positions in August, higher than the 148,000 positions Wall Street was predicting.
July’s figure was revised down to 142,000, from the 156,000 positions that was initially reported.
“In August we saw a rebound in private-sector employment,” Ahu Yildirmaz, vice president and co-head of the ADP Research Institute said in a statement. “This is the first time in the last 12 months that we have seen balanced job growth across small, medium and large-sized companies.”
Mark Zandi, chief economist of Moody’s Analytics, added, “Businesses are holding firm on their payrolls despite the slowing economy. Hiring has moderated, but layoffs remain low. As long as this continues recession will remain at bay.”
Though the ADP report is not always a reliable indicator of what the Bureau of Labor Statistics (BLS) report will illustrate, it does provide a bit of insight into the health of employment in the U.S.
Powell speaks
Meanwhile, Fed Chair Powell spoke in Zurich on the “Economic Outlook and Monetary Policy” Friday afternoon. This was Powell’s last public speaking engagement before the Fed’s quiet period ahead of its policy-setting meeting at the end of the month.
Today’s comments in Zurich came as President Donald Trump’s attacks on him the central back continued. Friday morning, the president launched a fresh attack on Powell through a tweet ahead of the BLS’ release of the August employment report.
I agree with @jimcramer, the Fed should lower rates. They were WAY too early to raise, and Way too late to cut - and big dose quantitative tightening didn’t exactly help either. Where did I find this guy Jerome? Oh well, you can’t win them all!
— Donald J. Trump (@realDonaldTrump) September 6, 2019
Powell’s comments were viewed as an abbreviated version of similar comments he made at Jackson Hole a couple of weeks ago. He was asked about a wide variety of topics including politics, cryptocurrencies, the state of the U.S. economy and trade. Powell maintained that the central bank is determined to prolong the economic expansion for as long as possible and is not forecasting a recession at this time. He also said that the Fed would not comment on trade policy, and the overall outlook for the economy is good. The Fed currently projects moderate economic growth both in the U.S. and globally. Nevertheless, there are significant headwinds to the economic outlook, according to Powell. Those headwinds include slowing global growth, trade uncertainty, muted inflation.
Investors have been hyper-focused on the Fed in recent days as the September policy meeting approaches. Markets are expecting another rate cut at this month’s meeting following the central bank’s first interest rate cut in more than a decade at its July meeting.
A couple of weeks ago at the Jackson Hole conference, Powell expressed that the Fed would do what it needs in order to prolong the current economic expansion. He explained that the U.S. is facing more challenges now than it was at the Fed’s most recent policy meeting. ““The three weeks since our July FOMC meeting have been eventful, beginning with the announcement of new tariffs on imports from China,” Powell said in Jackson Hole. On Sunday, 15% U.S. tariffs were added on more than $100 billion worth of Chinese imports, as the trade war between the U.S. and China continues to rage on.
STOCKS: Lululemon jumps, Zoom video falls on earnings
Athleisure brand Lululemon (LULU) shares jumped and hit all-time highs Friday after second-quarter results beat expectations Thursday evening. Lululemon also boosted its full-year sales and profit outlook. Same-store sales, a key industry metric, rose 15% during the quarter with men’s sales continuing to dominate with 35% growth. Sales were also strong in North America. Revenue in the region surged 21%. Lululemon reported earnings of 96 cents per share on $883.35 million in revenue. Much like other retailers, online sales were in focus. Lululemon’s digital sales rose 31% during the second quarter. In the first quarter, the company launched an option to allow purchases online and pick up in store across all of its North American stores.
Recent IPO Zoom Video Communications (ZM) shares were volatile Friday, after posting a surprise profit and boosting its guidance on Thursday after the bell. Zoom expects full-year sales between $535 million to $540 million. The video-conferencing company made its public debut in April after pricing shares at $36. Shares have soared 165% since its IPO as of Thursday’s closing price.
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Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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