Key Jobs Report to Drive ETFs on Friday

Investors are holding their breath ahead of the all-important jobs report set for release this Friday, Sept. 6.

Markets were rocked last month after the jobs data for the month of July showed weaker hiring than expected. The SPDR S&P 500 ETF Trust (SPY) fell 8.4% from its highs, while the Invesco QQQ Trust (QQQ) tumbled 13.5%.

Bulls are hoping that they don’t see something similar after this week’s jobs report, which measures hiring during August.

Economists are expecting that nonfarm payrolls increased by 165,000 in the month, up from the 114,000 seen in July.

At the same time, the unemployment rate is expected to tick lower from 4.3% to 4.2%.

Indeed, the unemployment rate will be closely scrutinized now that it has risen nearly a full percentage point, from 3.4% in April of last year to 4.3% in July.

In addition to driving the stock market, the jobs data will have a significant impact on what the Fed decides to do at its next policy meeting on Sept. 18.

25 BPS Rate Cut Looming?

Currently, the pricing of fed funds futures suggests that there is a 55% chance of a 25 basis point rate cut and a 45% chance of a larger 50 basis point cut.

The jobs report may be the decisive factor that pushes the U.S. central bank to act one way or the other.

How the jobs report influences the Fed Reserve will in turn drive movements in the bond market. The 10-year Treasury bond yield was last trading at 3.76%, close to its lowest level since mid-2023.

The iShares 20+ Year Treasury Bond ETF (TLT) has been a highly popular fund this year among investors looking to profit from a decline in rates.

SPY, QQQ and TLT will likely see heavy volume on Friday as investors and traders digest the jobs report and its impact on Fed policy.