U.S. stocks closed lower on Friday as Treasury yields rose after the jobs data was released, with the 2-year Treasury yield touching its highest level since January 2025. According to Sina Finance, CME FedWatch showed federal funds futures traders pricing a 58% chance of a Fed rate hike in two weeks, up from 49.4% the previous day.
The S&P 500 fell 0.38% to 7,718.60, the Nasdaq Composite slipped 0.29% to 26,506.99, and the Dow Jones Industrial Average dropped 271.86 points, or 0.51%, to 53,414.25. The Philadelphia Semiconductor Index rose more than 3%, while memory stocks surged, with SanDisk up more than 11%, SK Hynix up more than 8%, Seagate Technology down more than 6%, Western Digital up more than 5%, and Micron Technology up more than 6%.
The August nonfarm payrolls report showed employment rose by 162,000, well above the 53,000 forecast in a Dow Jones survey of economists. The unemployment rate held at 4.1%, in line with market expectations, and June and July employment figures were both revised higher.
Juniper Henderson portfolio manager Bradford Smith said the August jobs report was very strong and reflected much greater volatility in labor data, while slightly increasing the odds of a September rate hike. He added that the debate over Fed policy would depend heavily on upcoming inflation data. Smith also said that after Fed Chair Kevin Warsh delivered a hawkish signal at Jackson Hole last week, the Fed had formed a clear bias toward raising rates if later data failed to show more progress on cooling inflation.
For the week, the Dow fell 0.3%, the S&P 500 rose 0.1%, and the Nasdaq Composite gained 0.4%.