US stocks remained steady, and Treasuries saw a modest increase as traders anticipated Friday's payrolls report. The report is expected to provide key insights into whether the Federal Reserve will raise interest rates in September. Currently, the odds of a quarter-point Fed hike this month are approximately 50/50. Although Fed Chair Kevin Warsh emphasized the central bank's focus on inflation last week, employment data could offer policymakers more time to assess the effectiveness of current policies in controlling price pressures.
Economists project the August jobs report will show an increase of 55,000 payrolls, following an unexpected decline in July employment. This outcome would align broadly with the average job growth observed this year. The unemployment rate is expected to remain stable at 4.1%. Analysts like Linh Tran at XS.com noted that the market requires a result weak enough to justify the Fed maintaining current interest rates, but not so weak as to raise recession concerns. Stronger-than-expected employment and wage growth, however, could lead to higher yields and negatively impact equities.
Conversely, figures that meet expectations and indicate a moderation in wage growth would create favorable conditions for the S&P 500 to retest its record high. Futures for the S&P 500 were largely unchanged, while Nasdaq 100 futures rose by 0.4%, marking their third consecutive day of gains, the longest streak since August 27, 2026. Dow Jones Industrial Average futures also remained relatively stable. The yield on 10-year Treasuries decreased by one basis point to 4.75%.
