Wall Street will have to contend with the fallout from the latest jobs data next week, with investors keeping an eye on troubling signals in the bond market. Inflation data is also on deck. Stocks vacillated Friday, with the major averages falling during midday trading after making a move to all-time highs earlier in the day. Those moves follow the latest nonfarm payrolls report, which confirmed what many investors were already anticipating: The labor market has taken a turn for the worse, and is now in a downtrend. The good news is that an interest rate cut is virtually guaranteed at the next Federal Reserve meeting less than two weeks away. Even a supersized rate cut is at play. The bad news: The economy appears to be weakening. Investors will have to deal with what that means in the week ahead. If the recent spike in Treasury yields continues, then demand for bonds could start to weigh on the equity market. The 10-year U.S. Treasury yield slid to 4.082% on Friday, its lowest level going back to April, following the jobs report. (One basis point equals 0.01%. Yields and prices move in opposite directions.) “We’re going to see what the bond market has to say about this information,” Bokeh Capital Partners CIO Kim Forrest said. US10Y YTD mountain U.S. 10-year Treasury yield, ytd To be sure, the outlook for the economy and the market remains somewhat constructive. Most on Wall Street expect economic growth to slow, not fall into a recession. The stock market, while vulnerable, is expected to have a surefire ballast in artificial intelligence. Evercore ISI’s Julian Emanuel this week set a 2026 S & P 500 target of 7,750 , a lofty forecast underpinned by the secular growth story in AI. And while there’s a wide range between his bull and bear cases for next year, the strategist remained optimistic that dips should be bought in the current market. “Long term, a long cutting cycle is good for stock price performance,” said Nancy Tengler, investment chief at Laffer Tengler Investments. “I think you still want to stay long and use volatility as your friend.” However, every piece of employment data will be heavily scrutinized going forward, as the market fields crosscurrents from all sides. Seasonally, the stock market remains at a weak point. The September Fed meeting is coming up. The federal budget deadline once again looms. Wall Street is headed for a mixed week. The Dow Jones Industrial Average , an index with greater exposure to the real economy, was on track to finish the week with losses. The tech-heavy S & P 500 and Nasdaq Composite were set to end the week higher. Inflation Friday’s jobs report may have tamped down the importance of next week’s inflation data. With the labor market showing significant signs of weakening, many expect it will take a dramatic number in consumer and producer prices to meaningfully change the interest rate outlook. “Although we are running above the Fed’s target in terms of inflation, there’s no question in mind that … the market is certainly looking more at labor dynamics right now than anything else,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities. “That can change in a couple of months, we just don’t know, but that seems to be the flavor to me. Yet any rise in the inflation data will do little to allay fears of stagflation. The August consumer price index that’s due out Thursday is expected to show a year-over-year rise to 2.9% from 2.7%, according to FactSet consensus estimates. Excluding volatile food and energy prices, CPI is expected to have held steady at 0.3% and 3.1% on a monthly and yearly basis, respectively. August producer prices are set to have cooled, though. Economists expect PPI to have risen 0.3% month over month, down from a 0.9% gain in July. Week ahead calendar All times ET. Monday, Sept. 8 3:00 p.m. Consumer Credit (July) Tuesday, Sept. 9 6:00 a.m. NFIB Small Business Index (August) Earnings: Synopsys Wednesday, Sept. 10 8:30 a.m. Producer Price Index (August) 10 a.m. Wholesale Inventories final (July) Earnings: Adobe Thursday, Sept. 11 8:30 a.m. Consumer Price Index (August) 8:30 a.m. Initial Claims (09/06) Earnings: Kroger Friday, Sept. 12 10 a.m. Michigan Sentiment preliminary (September) — CNBC’s Fred Imbert contributed reporting.
