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Investing.com -- U.S. stocks ended lower Friday as a soft jobs report fueled concerns about slowing growth, even while reinforcing expectations of a Federal Reserve rate cut this month.
The S&P 500 slipped 0.32% to 6,481.50, the Nasdaq Composite edged down 0.03% to 21,700.39, and the Dow Jones Industrial Average lost 220.43 points, or 0.48%, to 45,400.86. All three indexes had earlier touched record intraday highs before reversing.
Payrolls rose by just 22,000 in August, well short of the 75,000 forecast, while unemployment ticked up to 4.3%. The data cemented bets on at least a quarter-point Fed cut, with traders also assigning some odds to a half-point move.
For the week, the S&P 500 gained 0.33% and the Nasdaq rose 1.14%, while the Dow slipped 0.32%.
This week, U.S. equity markets face a string of inflation reports as investors balance tariff risks and rising bond yields against elevated stock valuations.
The consumer price index on Thursday is the key release, with traders watching closely for signals on how inflation might shape the Fed’s policy path and whether tariffs are pushing up costs. Expectations for faster easing strengthened after last week’s weak jobs report.
Art Hogan, chief market strategist at B Riley Wealth, said only a CPI figure that comes in “egregiously higher” than forecasts could challenge assumptions of near-term rate cuts.
Futures markets are now pricing in about 70 basis points of easing by December, equivalent to nearly three cuts.
Producer price data (PPI) on Wednesday will provide another look at potential tariff effects on inflation.
Last of Q2 results on deck
The second-quarter earnings season is nearly over, though several notable companies are still set to deliver trading updates this week.
These include GameStop, Adobe, and Synopsys (NASDAQ:SNPS).
This season, 80% large-cap companies topped EPS estimates and 80% exceeded sales expectations, compared with 79% and 62%, respectively, in Q1.
What analysts are saying about U.S. stocks
Evercore ISI: "While 2025’s Rollercoaster recovery shares much in common with 1998 kickoff of the Dotcom acceleration, there are important differences. AI adoption has already touched all corners of society and industry, Stock participation in the Bull market is broad, and the Fed is in the midst of a cut cycle, contrasting 1999. Yet “Scares” are a feature of Tech innovation-driven Bull markets – -10% or more pullbacks were frequent in the Internet Bull. We continue to view a near term pullback as base case … and a buying opportunity."
Morgan Stanley: The weak jobs report supports our view that we’re transitioning to early cycle—from rolling recession to rolling recovery. Near-term risk is tied to whether the monetary policy response is significant enough. Potential choppiness in the short-term should set up a strong finish into both YE & 2026."
RBC Capital Markets: "Following the weak August jobs report, we think it’s worth noting that if recession fears pick up, a tier 2 or tier 3 decline would be reasonable to anticipate. We think stocks priced in a growth scare in April, but not a recession."
Yardeni Research: "A rate cut next week, after the FOMC meets Wednesday, is practically a foregone conclusion. Stimulating an economy that doesn’t need stimulation won’t create more workers to address the undersupply that’s constraining the demand for labor, Dr Ed explains. Plus, cutting rates when it’s not necessary could cause stock prices to melt up and destabilize the broader financial system."