September 6, 2025 Market Update

Weekly initial jobless claims rose to the highest since June, and the August jobs report showed only 22,000 jobs added last month, far below expectations with prior months revised lower, reinforcing earlier signals that the labor market is cooling.  The weak data erased earlier stock market gains as recession worries rose, but strengthened expectations that the Fed will move to cut interest rates soon.

The labor market data also influenced the bond market, with short-term yields falling as the odds of a rate cut rose.  Longer-term yields were less affected, as expectations for lower interest rates have already been priced in.  Credit markets were stable by and large.

In short, markets took the week’s developments in stride.  Next week, Mr. Market’s attention will turn to upcoming inflation reports, with the Producer Price Index (PPI) due Wednesday and the Consumer Price Index (CPI) on Thursday.  The data will give us fresh insights on the degree to which rising prices threaten the U.S. economy and markets.

Most of the second quarter earnings season is now in the books, and results have been steadier than many investors expected.  But while bottom-line results often exceeded estimates, many companies tempered their outlooks for the months ahead.

Technology companies once again set the pace, with solid revenue growth and resilient margins.  Consumer-oriented businesses also showed surprising strength, suggesting households are still willing to spend.  By contrast, industrial and cyclical sectors struck a more cautious tone, with management teams noting that demand is softening in some parts of the economy.

Better-than-expected earnings paired with more guarded guidance suggest business leaders are grappling with the same uncertainty as investors: how quickly growth might cool and how the Federal Reserve will respond.

That’s all for now.  Have a great weekend and invest wisely my friends.