TLDR
- The Dow, S&P 500, and Nasdaq all fell Friday after a stronger-than-expected August jobs report
- The US economy added 162,000 jobs in August, far above the 55,000 forecast
- Traders raised their bets on a September Fed rate hike to around 60% odds
- Lululemon stock crashed 16% after cutting its revenue and profit guidance
- Treasury yields rose as investors priced in the possibility of tighter monetary policy
The US stock market fell on Friday after a hot August jobs report pushed investors to raise their bets on a Federal Reserve interest rate hike.
The Dow Jones Industrial Average dropped around 0.7%, or about 380 points. The S&P 500 fell 0.5%, and the Nasdaq Composite slipped around 0.4%.
The August payrolls report showed 162,000 jobs added last month. Economists had expected just 55,000 new jobs. That beat sent a strong signal that the labor market is holding up.
The strong number raised a key question on Wall Street: would the Fed use it as a reason to hike rates?
BREAKING: The US economy adds +162,000 jobs in August, well above expectations of +55,000.
The unemployment rate was 4.1%, in-line with expectations of 4.1%.
July’s job number was also revised up by +43,000 jobs and is now positive for the month.
The US job market nearly…
— The Kobeissi Letter (@KobeissiLetter) September 4, 2026
According to CME Group data, traders pushed the odds of a September rate hike to roughly 60% following the report. That was a clear shift from where expectations had been earlier in the week.
Fed Signals and What Comes Next
Fed Chairman Kevin Warsh has said he is not placing too much weight on any single report. He has also suggested that wage data is less tied to inflation than some believe, which could limit how much the jobs number moves the needle for the central bank.
Some analysts argue that Friday’s data alone may not be enough to lock in a hike. The next major data point will be the August Consumer Price Index, due on September 11.
The Personal Consumption Expenditures index, the Fed’s preferred inflation measure, is not expected until September 30. That falls after this month’s Fed meeting, meaning policymakers may act before seeing that data.
Treasury yields rose on Friday as investors adjusted their rate expectations.
Despite the day’s losses, the three major indexes remained close to their record highs. The relatively mild selloff may reflect some investor confidence that the economy can handle a rate increase.
Jobs reports are also subject to revisions. Some investors may be waiting to see if the August figure holds before making big moves.
Lululemon Drags on Sentiment
Outside of the macro picture, Lululemon was the biggest individual stock story of the day. Shares fell around 16% after the company cut its revenue and profit guidance and reported a decline in second quarter revenue.
There were no other major earnings reports on the schedule for Friday.
The S&P 500 closed near 7,708, the Dow near 53,301, and the Nasdaq around 26,463.
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