Stocks opened higher Friday as market participants cheered a bad-news-is-good-news jobs report. But the main indexes quickly turned lower once the reality of a slowing labor market settled in, with a mixed round of late-season earnings reports not helping to shift sentiment.
Ahead of the open, the Bureau of Labor Statistics said the U.S. added 22,000 in August, missing economists' estimate for 75,000 new positions. Figures for June were revised down by 27,000, from +14,000 to -13,000, while July job growth was upwardly revised by 6,000 (from 73,000 to 79,000 additions).
With these revisions, the U.S. added 21,000 fewer jobs in June and July than previously reported.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The unemployment rate, which is calculated from a separate survey, ticked up to 4.3% from 4.2%.
The August jobs report "was much weaker than expected and featured downward revisions as well, and that news is the cause of today's volatile action," says Argus Research. "The good news/bad news fight is between those who see the jobs report as guaranteeing lower interest rates and those who see the same report as an ominous sign of a slowing economy."
On the good news side, futures traders are now pricing in expectations that the Federal Reserve will lower interest rates by a quarter-percentage point at each of this year's three remaining meetings, according to CME Group FedWatch.
As for the bad news, Wells Fargo Investment Institute Senior Global Market Strategist Scott Wren says the data "syncs with our view that the labor market is likely to gradually decelerate in coming months/quarters and continue to look for the unemployment rate to move higher by the end of this year."
Wren and his colleagues expect the unemployment rate to hit 4.5% by year's end as the economy slows.
All eyes now turn to next week's economic calendar and Thursday's release of the August Consumer Price Index (CPI) – the last major inflation update ahead of the September Fed meeting.
Broadcom pops after earnings, while Lululemon drops
A relatively light earnings calendar saw plenty of fireworks. Broadcom (AVGO), for one, surged 9.4% – making it the best S&P 500 stock today.
The chipmaker reported higher-than-expected fiscal third-quarter earnings and revenue and gave upbeat fourth-quarter guidance.
Broadcom also said that it has secured $10 billion in orders for custom AI chips from a new customer, which The Wall Street Journal speculates is OpenAI.
"We view this as a thesis-confirming quarter that underscores rising demand for AI ASICs across existing customers as well as potential upside from new XPU programs ramping up into production," says William Blair analyst Sebastien Naji.
Naji adds that he expects revenue growth "to accelerate meaningfully" in the upcoming fiscal year, which will translate "into substantial earnings power."
At the other end of the S&P 500 was Lululemon Athletica (LULU), which plunged 18.6% after the athletic apparel maker reported lower-than-expected second-quarter revenue and gave weak full-year guidance.
"We are facing yet another shift today within the industry related to tariffs and the cost of doing business," said Lululemon CEO Calvin McDonald in the company's earnings call. "The increased rates and removal of the de minimis provision have played a large part in our guidance reduction for the year."
BofA Securities analyst Lorraine Hutchinson downgraded the consumer discretionary stock to Neutral (Hold) from Buy after earnings and slashed her price target to $210 from $300, "to reflect a lower sales outlook and margin pressure from tariffs and de minimis."
Tesla jumps after its board proposes a new pay plan for Elon Musk
In non-earnings news, Tesla (TSLA) shares jumped 3.6% after the electric vehicle maker's board of directors proposed a new incentive package for CEO Elon Musk.
According to a regulatory filing, Tesla's board outlined a new "super ambitious incentive package for a pioneering, ambitious and unique CEO" that could be worth nearly $1 trillion ($975 million if the company's share count remains, according to CNBC).
Musk will receive these shares if the company meets several milestones, including Tesla eventually reaching a market cap of $8.5 trillion (it's currently at $1.1 trillion), the company delivering 20 million EVs and having 1 million robotaxis in commercial operation.
"We believe that Elon's singular vision is vital to navigating this critical inflection point," the company wrote in its letter to shareholders. "Simply put, retaining and incentivizing Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history."
The new pay plan still requires shareholder approval. Tesla will host its annual meeting of shareholders on Thursday, November 6.
As for the main indexes, the Dow Jones Industrial Average closed down 0.5% to 45,400, the S&P 500 fell 0.3% to 6,481, and the Nasdaq Composite gave back 0.03% to 21,700.
Related content
- SPACs, SMRs and How to Invest in the Nuclear Insurgency
- If You'd Put $1,000 Into Google Stock 20 Years Ago, Here's What You'd Have Today
- Klarna IPO: Should You Buy KLAR Stock?
-
Amazon Surge Sends S&P 500, Nasdaq Higher to Start November: Stock Market TodayAmazon inked a $38 billion cloud deal with OpenAI, which sent the stock to the top of the Dow Jones on Monday.
-
If You'd Put $1,000 Into Home Depot Stock 20 Years Ago, Here's What You'd Have TodayHome Depot stock has been a buy-and-hold banger for truly long-term investors.
-
Amazon Surge Sends S&P 500, Nasdaq Higher to Start November: Stock Market Today
Amazon inked a $38 billion cloud deal with OpenAI, which sent the stock to the top of the Dow Jones on Monday.
-
If You'd Put $1,000 Into Home Depot Stock 20 Years Ago, Here's What You'd Have Today
Home Depot stock has been a buy-and-hold banger for truly long-term investors.
-
Eight Steps to Help Get You Through the Open Enrollment Jungle at WorkWondering how to survive open enrollment this year? Arm yourself with these tools to cut through the process and get the best workplace benefits for you.
-
Seven Moves for High-Net-Worth People to Make Before End of 2025, From a Financial PlannerIt's time to focus on how they can potentially reduce their taxes, align their finances with family goals and build their financial confidence for the new year.
-
I'm a Financial Planner: These Are the Seven Tiers of Retirement Well-BeingLet's apply Maslow's hierarchy of needs to financial planning to create a guide for ranking financial priorities.
-
Why More Americans Are Redefining Retirement, Just Like I DidRetirement readiness requires more than just money. You have a lot of decisions to make about what kind of life you want to live and how to make it happen.
-
3 Major Changes Investors Must Prepare for in 2026A possible stock market bubble. Trump accounts. Tokenized stocks. These are just three developments investors need to be aware of in the coming months.
-
A Compelling Case for Why Property Investing Reigns Supreme, From a Real Estate Investing ProInvestment data show real estate's superior risk-adjusted returns and unprecedented tax advantages through strategies like 1031 exchanges and opportunity zones.
