As we look ahead to the coming week in the US market, it’s timely that the nation observes Labor Day — a holiday dedicated to honoring workers — just as critical labor market data set to be released later this week could significantly influence the Federal Reserve’s (Fed) rate cut decision in September.
Key releases to watch include the non-farm payrolls report for August and the unemployment rate for August, which will provide a clearer picture of the job market’s strength. The Fed’s focus on employment means that any surprises on the downside may spur the market to speculate about a larger September rate cut or extended reductions in the months to follow.
The non-farm payrolls report has a consensus forecast of 163,000 jobs added in August. The Bureau of Labor Statistics (BLS) reported that the US economy added 114,000 jobs in July, well below the downwardly revised 179,000 jobs in June. The unemployment rate is expected to be around 4.2% in August, following an increase to 4.3% in July from 4.1% in the previous month.
Another key focal point will be the JOLTs Job Openings report for July, which is expected to show 8.10 million job openings, a slight decrease from June’s 8.184 million.
Attention will also be on the ISM Manufacturing PMI for August. With a consensus forecast of 47.8, the data suggests a potential contraction in the US factory activity. The ISM Manufacturing PMI for July was 46.8, marking the sharpest contraction since November 2023.
The ISM Services PMI for August, with a consensus forecast of 51.5, will also be released and is anticipated to show continued recovery. In July, the services sector showed signs of a moderate rebound, with the PMI rising to 51.4 from 48.8 the previous month.
In addition to economic data, several major companies are set to report earnings, including Hewlett Packard Enterprise Co (NYSE:HPE), Broadcom Inc (NASDAQ:AVGO), Zscaler Inc (NASDAQ:ZS), Copart Inc (NASDAQ:CPRT), Dick’s Sporting Goods Inc (NYSE:DKS), and DocuSign Inc (NASDAQ:DOCU). These earnings reports will provide insights into corporate performance amid the current economic environment and could influence market sentiment.
Last week, US stocks ended August on a positive note, with all three major averages closing the volatile month in the green. The S&P 500 rose 3.9%, the Nasdaq gained 4.1%, and the Dow added 2%. As we await new updates, investors should stay alert to how evolving labor data and earnings reports might impact market trends and Fed policy.
Disclaimer: ProsperUs Manager of Content Hailey Chung doesn’t own shares of any mentioned companies.
