S&P500 and Nasdaq 100: Weak Jobs Data Spurs Forecast for Deeper Fed Cut Today

S&P 500 Futures Hold Steady as Soft Jobs Data Fuels Fed Rate Cut Bets

U.S. stock futures remained resilient Friday morning after August’s jobs report revealed a significant hiring slowdown. S&P 500 futures edged up 0.3%, with Nasdaq-100 futures rising 0.7%. Dow futures slipped 0.1%. Traders are now increasingly confident the Federal Reserve will move to cut interest rates at its September 17 policy meeting.

The Bureau of Labor Statistics reported the U.S. economy added just 22,000 jobs in August—well below the 75,000 expected by economists surveyed by Dow Jones. Unemployment ticked up to 4.3%, matching estimates. Combined with weak ADP private payrolls earlier in the week, the data paints a picture of a cooling labor market that could give the Fed room to ease policy.

Will the Federal Reserve Cut Rates This Month?

Interest rate futures are now pricing in a 99% probability the Fed will cut its benchmark rate by 25 basis points, according to CME’s FedWatch tool. Some strategists even see the door opening for a larger 50-basis-point move. “This gives the Fed the greenlight,” said Nuveen’s Saira Malik on CNBC, citing Friday’s report as a key catalyst.

The 10-year Treasury yield dropped to 4.084%, the lowest since early April, while the 2-year yield fell to 3.491%. Falling yields reflect increased expectations for monetary easing, which tends to support risk assets like equities.

Which Stocks and Sectors Are Reacting Most?

Despite the weaker jobs report, major indexes are poised for a positive week. The S&P 500 is up 0.7%, with the Nasdaq gaining 1.2%, buoyed by risk-on sentiment following expectations of Fed support.

However, Lululemon tumbled 19% premarket after slashing full-year guidance. The retailer cited tariff headwinds and lower earnings forecasts—now expected between $12.77 and $12.97 per share, well below Wall Street’s $14.45 estimate.

In contrast, Tesla rose 2% after filing details on a massive CEO award plan tied to shareholder value creation. Broadcom added over 4% in after-hours trading following upbeat quarterly results and stronger-than-expected revenue guidance of $17.4 billion. DocuSign also gained 5% post-earnings, beating both EPS and revenue estimates.

What’s the Market Outlook Heading Into the Fed Meeting?

Traders are turning their focus squarely toward the Federal Reserve’s upcoming decision. With employment data softening and inflation expectations relatively contained, rate cuts are now almost fully priced in. However, deeper economic deterioration could shift market tone quickly.

Short-term, equity markets appear supported by falling yields and Fed dovishness, but sentiment may turn if growth concerns intensify. All eyes are now on next week’s CPI and PPI prints, which could further influence the Fed’s rate path.

More Information in our Economic Calendar.