Stock market today: Dow, S&P 500, Nasdaq slip as hot jobs report fuels Fed rate-hike bets

Yahoo Finance’s Ben Werschkul reports:

Touting Friday’s blowout jobs number, President Trump used the opportunity to weigh in on a new spike in the US trade deficit, threatening embargoes on unfavored countries.

Trump posted on Truth Social, in what appeared to be a directive to the Federal Reserve, to “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.”

Trump, who has long voiced a desire for lower interest rates, asserted that an embargo could be “BETTER THAN TARIFFS” and said “the Fed Board, with its great new leader, must get smart.”

Pressure on the central bank from the president isn’t new, but the threat of a trade embargo is. Embargoes would be a new level of disruption for the global economy, and the president likely has the legal authority to follow through.

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Diesel prices hit a record high on Friday as the wars in the Middle East and Russia disrupt energy flows.

The move higher is not without consequences for the global economy, as it has a wide range of uses, from home heating and transportation to heavy construction and farming equipment.

Bloomberg reports:

The widely used fuel climbed to a nationwide average of $5.85 a gallon at the pump on Thursday, according to the American Automobile Association. The advance pushed the price above the former peak set in June 2022, as a crunch on global supplies continues to unfold just ahead of peak-demand season.

In the Middle East, the US-Iran war has disrupted flows through the Strait of Hormuz , with TotalEnergies SE’s head Patrick Pouyanne saying in August there wasn’t a “single tanker of products” moving out of the waterway. At the same time, Russia extended a ban on diesel exports through September after a wave of Ukrainian drone strikes on the country’s refineries.

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Stocks drifted lower in early trading as markets absorbed a surprisingly strong jobs report that showed the US added 162,000 jobs, far exceeding expectations.

The Dow (^DJI) and S&P 500 (^GSPC) fell by 0.3% and 0.2%, respectively. The Nasdaq (^IXIC) traded near the flat line.

Here’s a look at the sector action in early trading:

Bond yields jumped in reaction to the jobs report. The 10-year yield (^TNX) increased by 1 basis point to 4.77%, while the 30-year yield (^TYX) held at 5.24%.

The probability of a Federal Reserve rate hike in September, as tracked by CME Group’s FedWatch tool, jumped to 60% in the aftermath of the August jobs report release. The day before, traders had pared back odds of a rate hike to a 50-50 split.

Yahoo Finance’s Jake Conley reports:

Despite widespread worries that AI would quickly destabilize and displace the labor force, data suggests that this may not be the case, as employers opt for adaptation rather than layoffs.

Planned job cuts in the US labor market fell in the first eight months of 2026 to the lowest level seen in four years, according to data released Thursday by the outplacement firm Challenger, Gray & Christmas, while hiring plans through the same period reached their highest level since 2023.

Put simply, “There is still no evidence that AI is replacing workers,” Apollo Global chief economist Torsten Sløk said Thursday, a sign that AI’s impact on the economy may be shaping up differently than expected. (Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.)

Job cut announcements in August rose from July, but the total so far this year is down 41% compared to 2025. And even those layoffs that were announced in August weren’t primarily driven by AI; employers cited other reasons beyond AI as the primary driver of job cuts for the first time in six months.

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Economic data: Change in nonfarm payrolls, August (+58,000 expected, -23,000 previously); Change in private payrolls, August (+50,000 expected, +30,000 previously); Change in manufacturing payrolls, August (+5,000 expected, +5,000 previously); Unemployment rate, August (4.1% expected, 4.1% previously); Labor force participation rate, August (61.4% expected, 61.4% previously); Average hourly earnings, month-on-month, August (+0.3% expected, +0.1% previously); Average hourly earnings, year-on-year, August (+3% expected, +3.2% previously)

Earnings calendar: No notable earnings.

Catch up on some top stories you might have missed overnight:

Volkswagen plans 50,000 more job cuts amid biggest overhaul in its history

Fed’s Waller channels Lennon with a plea to ‘give disinflation a chance’

Lululemon sinks after cutting forecast as revenue declines

Asian shares climb ahead of US jobs data, Fed’s Waller soothes bonds

Oura files to go public

Bloomberg reports:

The dollar slumped to start September as traders cut bets on a Federal Reserve rate hike this month and a surging yen rippled across global currency markets.

The Bloomberg Dollar Spot Index was on track to wrap up the week 0.7% lower after touching its lowest level since May on Thursday. Investors now see roughly even odds of a rate hike at the central bank’s Sept. 16 decision after Fed Governor Christopher Waller pointed to progress on inflation, adding to pressure on the greenback amid lingering concerns over the US fiscal outlook.

In Japan, the yen is on track for its best week since July, gaining 2.7% against the dollar. The move has been fueled by expectations that the Bank of Japan may raise its benchmark rate by a quarter point this month, while leaving the door open to faster hikes thereafter.

“The dollar took a step back this week as Fed speak leaned dovish and a yen rally spilled over to the broader USD complex,” said Noah Buffam, strategist at CIBC Capital Markets.

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