This week, markets responded to a surprisingly weak U.S. jobs report that tilted sentiment strongly toward an imminent Federal Reserve rate cut. The S&P 500 and Nasdaq posted modest gains for the week, while the Dow lagged. Bonds rallied as yields dropped across the curve, and the VIX slipped to lower territory, offering a sense of calm amid renewed volatility concerns. International markets mirrored mixed tone, with Europe under pressure and Asia steady, while attention turned sharply to forthcoming payroll, inflation, and Fed updates as traders look ahead to a pivotal policy shift.
Weekly Index Performance
| Index | Last Close (Sept 5) | Weekly Change |
| S&P 500 | 6,481.50 | +0.3% |
| Nasdaq Composite | 21,700.39 | +1.1% |
| Dow Jones Industrial Average | 45,400.86 | -0.3% |
Key Drivers of Last Week’s Rally
Markets were driven largely by the August nonfarm payrolls report showing just a 22,000-job increase, well below the 75,000 economists expected, fueling aggressive Fed easing expectations. As a result, futures now price in approximately an 88% chance of a 25-basis-point cut at the September 16–17 meeting. The weak labor data sent the U.S. dollar sharply lower, dropping 0.70% on the dollar index to 97.54 and weakening roughly 1% versus the yen and Swiss franc. Treasury yields tumbled across maturities, reinforcing the rate-cut narrative.
Sector Highlights
Technology and growth stocks led this week’s rally, helping push the Nasdaq ahead. Defensive sectors, including utilities and consumer staples, also drew interest as bond yields sank. On the flip side, industrials and energy lagged, pressured by renewed global growth and trade concerns. Market participants pointed to weak payrolls reinforcing fears of soft demand, despite recent optimism from AI-linked names earlier in the week, to explain sector rotation back toward defensives.
Global Market Snapshot
In Europe, the STOXX Europe 600 ended the week down around 0.17%, weighed by political and fiscal jitters. The MSCI ACWI, while not reported exact, is estimated to have dipped modestly as global equities struggled with mixed signals. In Asia, the CSI 300 held steady as trade news, especially the finalized U.S.-Japan auto-tariff deal, weighed positively on Japanese markets.
Macro & Rates
The 2-year Treasury yield dropped roughly 12 basis points to about 3.48%, while the 10-year yield slid to around 4.07%, narrowing but maintaining a positive yield curve. The VIX declined to approximately 15.3 by Thursday from 17.2 the prior session, reflecting easing intraday volatility. Long-term Treasury yields also eased alongside short rates, driven by falling jobless claims and softer private payrolls.
What to Watch This Week
September 8th: U.S. initial jobless claims data releases.
September 9th: Revised U.S. employment numbers, pay attention to revisions to August payrolls.
September 11th: U.S. inflation data (CPI), a key input to the Fed’s interest rate outlook.
September 16,17th: FOMC meeting; rate-cut decision and economic projections due.
