Job Market Cracks, Fed Steps In, Wall Street Cheers: This Week In Markets

The U.S. labor market hit the brakes hard this summer, showing cracks not seen since the pandemic. In August, nonfarm payrolls rose by just 22,000—down from July's weak 79,000 gain—and June was revised to show a net loss of 13,000 jobs, the worst monthly print since December 2020.

The three-month average now sits at 29,000, a level so low that it virtually seals the case for Federal Reserve rate cuts. The first move is widely expected to come at the September 17 meeting with a 25-basis-point reduction, followed by additional cuts in October and December.

Lower-rate expectations are keeping Wall Street upbeat, even as the labor market stagnates. Seasonality fears—since September has historically been a rough month for stocks—were brushed aside as the S&P 500 broke to fresh record highs on Thursday before a mild pullback on Friday. Year-to-date, the index is still up about 10%.

Gold, meanwhile, is in a league of its own. The precious metal smashed through the $3,500 barrier that had capped prices since April, logging gains in seven of the past eight sessions. Up 37% so far this year, gold is on track for its best annual performance since 1978.

Beyond rate-cut tailwinds, investors appear to be hedging against extreme scenarios, chief among them the risk that the Federal Reserve's independence could come under political pressure from President Donald Trump. While still a remote possibility, the uncertainty has been enough to fuel persistent safe-haven demand.

Read also: Trump’s War On Fed Could Ignite Gold’s $4,500 Liftoff

At the sector level, cyclical stocks lagged, with energy, industrials and financials ending the week in the red. Communication services outperformed, driven by a 9% surge in Alphabet Inc. GOOGL, its best week since April 2024, after a U.S. federal judge ruled against breaking up Google's core platforms in a major antitrust case.

Detroit automakers struggled. As of Friday midday trading, General Motors Inc. GM and Ford Motor Co. F were each down 0.5% for the week, while Stellantis N.V. STLA tumbled more than 5%.

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