New Arguments in Favor of the "Hawks": Strong Employment Data Pushed Down the Dow Jones

All three major U.S. stock indices, although they opened in different directions, moved into the “red zone” 15 minutes after trading began on September 4. Investors are assessing U.S. labor market data that significantly exceeded economists’ forecasts and now leaves the Fed with less reason not to raise rates in September, according to CNBC.

For example, the Dow Jones “blue-chip” index fell 0.3% during Friday’s trading session, the S&P 500 edged down by a marginal 0.09%, and the Nasdaq Composite—the only one to open slightly higher—later turned negative, falling 0.1%.

U.S. Treasury yields jumped: yields on 10-year Treasuries rose by 4 basis points to 4.802%, while yields on 2-year Treasuries rose by more than 7 basis points to 4.425%, — the highest level since January 2025. Meanwhile, the yield on 30-year Treasury bonds remained virtually unchanged at 5.263%.

Bitcoin, which is sensitive to forecasts regarding the Fed’s monetary policy, fell below the $80,000 level reached during today’s trading—to $79,137—on news of a strong labor market, thereby losing nearly 3% from its intraday high.

“Today’s data [on U.S. employment] adds weight to the ‘hawkish’ camp [at the Fed], but still falls slightly short of providing a clear case for a rate hike [at the Fed’s next meeting] on September 16,” noted Vail Hartman of BMO Capital Markets (as quoted by Bloomberg).

Even a strong jobs report is unlikely to change the Fed’s plans, especially given the data interpretation preferences of Kevin Warsh, who took over as Fed chair a few months ago, said U.S. Bank strategist Rob Haworth, as reported by Barron’s. “Paradoxical as it may seem, if the Fed raises rates in September or later... I think the market will view it positively—as a sign that the central bank won’t let inflation get out of control,” said Andy Goldberg, a strategist at Nomura Asset Management.

The Fed and the market are now focused on the Consumer Price Index (CPI) report for August, which is scheduled to be released on September 11—ahead of the Fed’s meeting on the 16th. “There’s little here that could sway the regulator’s view that inflation remains the main concern,” noted Sima Sha, chief global strategist at Principal Asset Management. “Following today’s release, the market may slightly raise expectations for a rate hike in September; however, next week’s CPI report will most likely remain the key factor determining the rate decision,” she added.

In July, the Consumer Price Index rose 3.4% year-over-year, slowing slightly from June’s growth rate of 3.5%. That same month, the Federal Reserve kept interest rates unchanged for the fifth consecutive time.

According to the latest data, following the release of the labor market report, traders estimate the probability of a rate hike at the regulator’s next meeting in September at 60.4%, although just the day before, that estimate had hovered around 50%.

This article was AI-translated and verified by a human editor