US August jobs beat forecasts, reviving Fed rate-hike bets — September 5, 2026

Top U.S. Stories

• The Labor Department’s August jobs report showed nonfarm payrolls rose 162,000, nearly triple the roughly 55,000 economists expected. The unemployment rate held steady at 4.1%.
  • Why it matters: Strong hiring gives the Fed more room to raise rates to fight inflation, rather than less reason to worry. Markets read “good news” as bad news for stocks.
• Stocks fell on the report: the Dow declined 271.86 points to 53,414.25, the S&P 500 lost 29.11 points to 7,718.60, and the Nasdaq slipped 77.07 points to 26,506.99 on Sept. 4, following Thursday’s rally.
  • Why it matters: Odds of a Fed rate hike at the September 15-16 meeting climbed toward 58% on the CME FedWatch tool, reversing some of the dovish shift from Governor Waller’s remarks earlier in the week.
• Lululemon shares plunged roughly 17-18%, falling below $100 for the first time since 2018, after a revenue miss and a sharp cut to full-year guidance ahead of a new CEO taking over on Sept. 8.
  • Why it matters: The reset raised fresh questions about the health of discretionary retail spending as consumers face a stronger dollar and higher fuel costs.
• Crude oil held near multi-month highs, with WTI around $91 a barrel and Brent near $97, as tension around Iran and the Strait of Hormuz continued to underpin prices.
• With the Nov. 3 midterms approaching, elevated prices at the pump and grocery store remain a political headwind for the White House.

Compass Insight

Today’s market carries a familiar paradox: strong job growth was treated as bad news because it raises the odds the Fed hikes rates rather than holds or cuts. That tension has two direct channels into household budgets, even outside the U.S. First, currency: the stronger jobs data pushed the dollar higher, with the yen slipping past 156, a move that raises import costs for fuel and food in yen-based economies. Second, rates themselves: when U.S. hike odds climb, borrowing costs elsewhere tend to firm too, feeding through to mortgages and corporate financing. The near-term marker is the Fed’s September 15-16 meeting — any hawkish surprise there could extend today’s selloff. Further out, keep watching crude: with WTI near $91 and Brent near $97 on persistent Middle East risk, sustained high energy costs make it harder for any central bank to ease, prolonging a higher-for-longer rate environment. Anyone with floating-rate debt should treat further rate increases as a real possibility, not a tail risk.

Markets

The Dow, S&P 500, and Nasdaq all pulled back roughly 0.3-0.5% on Sept. 4 as the strong jobs print revived rate-hike bets, a reversal from Thursday’s rally. The dollar strengthened broadly; USD/JPY traded near 156 late in the week. WTI crude held around $91 and Brent near $97, both elevated on Middle East supply risk. In Japan, the Nikkei 225 rose 806.46 points (+1.26%) to close at 65,020.94 on Sept. 4, its first gain in five sessions, ahead of the U.S. jobs release.

Stocks in Focus

• Lululemon: shares fell roughly 17-18% after a revenue miss and a steep cut to full-year guidance, dragging down sentiment across discretionary retail.
• Energy: crude’s climb toward $91-97 a barrel kept energy shares in focus amid ongoing Middle East tension.
• Financials: banks drew interest on the view that higher-for-longer rates support lending margins.

This is information, not a recommendation to buy or sell any security.