US Bonds Climb As Jobs Cracks Keep Fed Cuts In Play: Markets Wrap

Wall Street traders gearing up for Friday’s jobs report got a trio of data that only reinforced the view of a cooling labor market, keeping bets on Federal Reserve rate cuts alive and driving bond yields down.

The latest readings on hiring and jobless claims came ahead of what economists expect to mark the weakest stretch of US job growth since the pandemic. Treasuries held gains after data showed solid services data. Equities fluctuated.

“Even the most easing-skeptical officials should concede increasing risks of labor market weakness,” said Will Compernolle at FHN Financial. “If this momentum continues into upcoming months, firms would soon be shedding workers faster than hiring them to the point of negative job growth.”

Money markets almost fully priced in a Fed move in September and a total of at least two reductions in 2025. Equities edged up.

Applications for US unemployment benefits rose to the highest since June. Private-sector payrolls increased by 54,000, according to ADP Research data, trailing estimates. Hiring plans fell to the weakest level for any August on record, according to outplacement firm Challenger, Gray & Christmas.

Employers in the US showed little enthusiasm to take on workers during August, and the unemployment rate probably ticked up to an almost four-year high.

Economists project about 75,000 jobs were added, based on the median of a Bloomberg survey, while the jobless rate is seen at 4.3%. Four straight months of sub-100,000 payrolls growth would mark the weakest such stretch since the onset of the pandemic in 2020. 

“The Federal Reserve’s free pass on the labor market has ended,” said Jamie Cox at Harris Financial Group. “You can expect the Fed to tilt it’s balance of risks to cut rates in September.” 

Tomorrow’s jobs report will be the deciding factor, but so far this week the data is confirming a slowdown in the labor market, according to Chris Larkin at E*Trade from Morgan Stanley.

“In the short term, markets may embrace that data because it should increase the odds of Fed rate cuts,” he said. “But if the numbers deteriorate too much, it could raise concerns about the health of the economy.”

Separate data Thursday showed Activity at US service providers expanded in August at the fastest pace in six months on the sharpest acceleration in orders in nearly a year.

The solid advance in those demand indicators suggests the largest part of the economy is gaining some traction after five straight months of sluggishness. At the same time, a measure of materials costs showed service providers continue to battle a stiff inflationary headwind.

• Investors worried about faltering momentum in the artificial intelligence trade are looking for a spark from Thursday’s earnings report by the world’s hottest chipmaker: Broadcom Inc.

• Salesforce Inc. projected lackluster quarterly sales growth, suggesting its artificial intelligence product isn’t yet paying off as quickly as hoped in the face of competition from emerging AI companies.

• Hewlett Packard Enterprise Co. Chief Executive Officer Antonio Neri said the company expects to weather a slimming of profit margins as it enters a new era of artificial intelligence-driven demand.

• Tesla Inc. said it has opened its robotaxi app to the general public, suggesting the company will soon roll out the service beyond a select group of early access users in Austin, Texas.

• C3.ai Inc. forecast revenue for the second quarter that missed the average analyst estimate. It also named Stephen Ehikian as its new CEO, replacing founder Tom Siebel, who will remain executive chairman.

• Figma Inc., a design software company, gave an annual revenue outlook that failed to impress investors hoping to see projections for greater growth in its first report as a public company.

• Goldman Sachs Group Inc. will invest as much as $1 billion in T. Rowe Price Group Inc. and team up with the asset manager to sell private-market products to retail investors.

• American Eagle Outfitters Inc. posted higher-than-expected quarterly sales, weeks after the jeans-maker found itself embroiled in a social media firestorm over its controversial Sydney Sweeney ad campaign.

• General Motors Co. will start the launch of the Chevrolet Bolt electric vehicle in December with one shift at its plant in Kansas after initially planning to build the plug-in compact on two shifts due to uncertain demand, the company said.

• Sanofi’s experimental drug for the skin condition atopic dermatitis disappointed investors with a less-than-expected benefit in a late-stage trial.

• Mediobanca SpA turned down a raised takeover bid from Banca Monte dei Paschi di Siena SpA, underlining its continuing opposition to the move even though Monte Paschi has already secured enough backing from investors to proceed with the deal.

• Samsung Electronics Co. unveiled a $650 version of its premium S25 smartphone and a pair of new tablets, the latest effort to roll out artificial intelligence features across its hardware lineup.

• Huawei Technologies Co. introduced an update to its groundbreaking trifold phone on Thursday, iterating on a novel form factor and underscoring its hardware engineering capabilities.

• DeepSeek is developing an artificial intelligence model with more advanced AI agent features to compete with US rivals like OpenAI in a newer frontier of the technology, according to people familiar with the matter.

Some of the main moves in markets:

Stocks

• The S&P 500 was little changed as of 10:06 a.m. New York time

• The Nasdaq 100 was little changed

• The Dow Jones Industrial Average was little changed

• The Stoxx Europe 600 rose 0.6%

• The MSCI World Index rose 0.1%

• Bloomberg Magnificent 7 Total Return Index rose 0.2%

• The Russell 2000 Index rose 0.1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%

• The euro fell 0.2% to $1.1643

• The British pound fell 0.1% to $1.3430

• The Japanese yen fell 0.3% to 148.50 per dollar

Cryptocurrencies

• Bitcoin fell 2.1% to $109,935.45

• Ether fell 2.8% to $4,343.23

Bonds

• The yield on 10-year Treasuries declined two basis points to 4.19%

• Germany’s 10-year yield declined two basis points to 2.72%

• Britain’s 10-year yield declined three basis points to 4.72%

• The yield on 2-year Treasuries declined two basis points to 3.60%

• The yield on 30-year Treasuries declined one basis point to 4.88%

Commodities

• West Texas Intermediate crude fell 1.5% to $63.02 a barrel

• Spot gold fell 0.5% to $3,540.86 an ounce