CWS Market Review – September 8, 2026

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

Wall Street got a shock on Friday when the September jobs report came in much better than expected. The number of jobs gained tripled Wall Street’s expectation. This was the biggest beat we’ve seen for August in nearly 30 years.

The stock market, however, pulled back some ahead of the holiday weekend. Stocks were down again today but not by much. The S&P 500 is still within striking distance of a new all-time high.

I say this knowing that September has traditionally been a touchy month for stocks, and October is little better.

Defensive stocks have been losing their luster in recent weeks. This comes after a good run for sectors like the one consumer staples and healthcare had through much of July.

That typically reflects optimism. Indeed, many tech stocks are leading the market again, but I’m still wary of big-cap tech as many of those stocks got hit hard in June and July, especially chip stocks.

Probably the most impressive sector in recent weeks has been financials like the S&P 500 Financials ETF (XLF). Over the last five months, financials have gained 33%. Except for minor spurts, the financial sector hasn’t been popular in 25 years. This may reflect the outlook for higher interest rates from the Fed. Also bear in mind that a bank is basically the yield curve with corporation papers. Now let’s dive into the good jobs report.

The Strong Jobs Report

On Friday, the Bureau of Labor Statistics released the jobs report for August, and it was a very good report. For August, the U.S. economy created 162,000 net new jobs. That more than tripled Wall Street’s consensus for 53,000 new jobs. It was the best report since March, and it topped the estimates for all 76 economists who were surveyed by the media. In fact, this was the largest beat for August in nearly 30 years.

The unemployment rate stayed at 4.1%. For two years, the unemployment rate has mostly stayed in the low-4% range. That’s a result of the “no hire, no fire” economy.

This was an especially important jobs report as it comes ahead of next week’s Federal Reserve meeting. Reports of the death of the labor market were grossly exaggerated. I also like to follow the U-6 unemployment rate which is a broader measure of joblessness. Last month, the U-6 rate fell to 7.7%. That’s at a two-year low.

This report may give a little boost to the hawkish case for raising rates, but it’s far from a sure thing. I suspect that traders will be betting on what the Fed will do up to the minute the policy statement is released. The last numbers show a 60% chance that the Fed will hike and a 40% chance that they’ll leave rates alone. This may be a moot point since the odds are nearly 50% for an October hike.

The Fed hasn’t touched interest rates all year. The last change came in December when the Fed lowered rates by 0.25%. The Fed hasn’t raised rates since July 2023.

President Trump welcomed the report and argued for an immediate rate cut. The president said that unless the Fed cuts rates soon, he’ll cut off trade with every nation that has a deficit with the U.S. We currently have trading deficits with 90 countries.

The government also revised higher its estimates for the previous month. The numbers for July were changed from a loss of 23,000 to a gain of 21,000, and June was raised to a gain of 11,000 from a loss of 11,000.

Here are some details from the report:

Restaurants and bars led with 59,000 new jobs, while government education rose by 42,000 and manufacturing contributed 16,000. Health care, the primary engine of job growth, saw a gain of just 13,000, compared with the monthly average of 32,000 over the prior 12 months.

There was some evidence of artificial intelligence hitting employment rolls: Information-related industries reported a loss of 23,000, putting the 12-month average at a loss of 8,000.

Women made up for 98% of the 162,000 jobs the U.S. added last month. This isn’t necessarily a “good news for women” story. Women tend to get lower-paying jobs. This stat may simply mean that hiring is clustered in a few lower-paying areas.

I was glad to see that average hourly earnings rose 0.3%. That matched Wall Street’s consensus. Over the last year, average hourly earnings are up by 3.1% which is basically in line with inflation. Inflation hasn’t been below the Fed’s 2% target in more than five years.

Here’s a look at the real Fed funds rate, meaning adjusted for inflation.

Next week’s policy statement will be interesting because there were three dissenting votes at the last Fed meeting. It’s unusual for the Fed to be so divided.

Despite some encouraging data, many Americans are still feeling uneasy about their finances. Earlier today, the New York Federal Reserve released its latest ‌Survey of Consumer Expectations.

The Fed’s report shows that many Americans are still worried about the jobs market and their own finances. For example, over the next year, Americans expect inflation of 3.6%. That’s quite high and I’m sure this fact hasn’t escaped the notice of Kevin Warsh.

Americans think the unemployment rate will rise to its highest level since Covid. One good note is that the expectations for losing a job fell a little.

The next big event for the market will come on Friday when the government releases the CPI report for August. While it’s true that inflation has improved, we’re still not yet at the Fed’s 2% target.

For Friday’s CPI report, Wall Street expects headline inflation to increase by 0.4% and the core rate to be up by 0.2%. For the trailing 12 months, Wall Street sees headline inflation up by 3.4% and the core rate up by 2.4%.

That’s all for now. The August CPI report is scheduled for Friday. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on September 8th, 2026 at 6:12 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.