What you need to know this week

The latest monthly jobs report is the main draw this week as investors head into September.

August employment data from the Labor Department is due at 8:30 AM. ET on Friday morning and are expected to show another strong month for the US labor market. Economists expect nonfarm payrolls to rise by 300,000 in August, according to Bloomberg data.

The amount is likely to play a key role in dictating the Federal Reserve’s next rate decision at its policy-making meeting later this month. Investors will be closely watching jobs data after Fed Chairman Jerome Powell said in a hawkish speech at the Jackson Hole symposium on Friday that he is willing to accept a softening of the labor market in exchange for easing inflation.

Federal Reserve Chairman Jerome Powell walks in Teton National Park, where economic leaders from around the world gathered for the Jackson Hole Economic Symposium outside Jackson, Wyoming, U.S., August 26, 2022. REUTERS/Jim Urquhart

Federal Reserve Chairman Jerome Powell walks in Teton National Park, where economic leaders from around the world gathered for the Jackson Hole Economic Symposium outside Jackson, Wyoming, U.S., August 26, 2022. REUTERS/Jim Urquhart

“If there is a conflict in the Fed’s two mandates as they work to slow inflation, Chairman Powell ranks price stability above maximum employment,” Jeff Klingelhofer, co-chief investment officer at Thornburg Investment Management, said in a note on Friday.

Powell’s remarks sent markets lower, with the three major averages hitting four-week lows on Friday.

The Nasdaq fell 3.9 percent and the S&P 500 fell 3.3 percent, with both indexes posting their biggest daily declines since June 13. The Dow Jones Industrial Average shed 1,000 points, or about 3%, on Friday.

“There will most likely be some easing of labor market conditions,” Powell said in his speech.

“While higher interest rates, slower growth and softer labor market conditions will reduce inflation, they will also bring some pain to households and businesses,” Powell added. “This is the unfortunate cost of deflation. But a failure to restore price stability would mean much greater pain.”

Until Friday, some market participants expected the US central bank could turn to its plans for monetary tightening, but Powell and other officials played down the possibility of a rate cut this year.

Inflation has shown signs of easing, but remains well above the Federal Reserve’s 2% target. Data from the Bureau of Economic Analysis on Friday showed that consumer prices fell slightly last month, with nominal PCE falling 0.1 percent between June and July, driven by a 4.8 percent drop in energy prices. On a year-over-year basis, headline PCE rose 6.3% in July.

David Malpas, president of the World Bank Group, looks next to a stuffed grizzly bear in Teton National Park, where economic leaders from around the world gathered for the Jackson Hole Economic Symposium, outside Jackson, Wyoming, U.S., August 26, 2022 .REUTERS/Jim Urquhart

David Malpas, president of the World Bank Group, looks next to a stuffed grizzly bear in Teton National Park, where economic leaders from around the world gathered for the Jackson Hole Economic Symposium, outside Jackson, Wyoming, U.S., August 26, 2022 .REUTERS/Jim Urquhart

And core PCE, the Fed’s preferred measure of inflation, rose 0.1% month-on-month in July and 4.6% from a year earlier, marking the slowest annual increase since October 2021.

However, Powell said another “unusually large” rate hike was possible in September after the central bank raised rates by 75 basis points in June and July.

“Restoring price stability will likely require maintaining restrictive policy for some time,” Powell said. “The historical record strongly warns against premature easing of policy.”

Elsewhere in labor market data, ADP will resume its private payrolls report with a new methodology on Wednesday after a temporary pause in June and July. Economists polled by Bloomberg expected the release to show 300,000 private payrolls were added in August.

ADP’s monthly private jobs report comes two days before the Labor Department releases its official jobs report. While the company’s print is an imperfect harbinger of the government’s release, it offers a snapshot of job growth over the period.

The Job Openings and Labor Turnover Survey (JOLTS), Challenger job cuts and initial weekly jobless claims are also included in the package of employment data to be released this week.

On the earnings front, the reporting period has largely subsided, but some potential market moving results remain. Traders will receive data from headliners such as Best Buy (BBY), HP (HPQ), Big Lots (BIG), Chewy (CHWY), Lululemon Athletica (LULU) and Broadcom (AVGO).

Economic Calendar

Monday: Dallas Fed Manufacturing ActivityAugust (-12.7 expected, -22.6 last month)

Tuesday: FHFA Home Price Indexmonth-on-month, June (0.8% expected, 1.4% last month). Market House Price IndexQoQ, Q2 (4.6% QoQ). S&P CoreLogic Case-Shiller 20-City Compositemonth-on-month, June (0.90% expected, 1.32% last month). S&P CoreLogic Case-Shiller 20-City Compositeyear-on-year, June (19.20% expected, 20.50% last month). S&P CoreLogic Case-Shiller US National Home Price Indexon an annual basis, June (19.75% on the previous month). Conference Board Consumer ConfidenceAugust (97.7 expected, 95.7 last month). JOLTS JobsJuly (10.475 million expected, 10.698 million last month)

Wednesday: MBA Mortgage Applicationsweek ended August 26 (-1.2% last week). ADP Employment ChangeAugust (300,000 expected); MNI Chicago PMIAugust (52.5 expected, 52.1 last month)

Thursday: Challenger Job Cutson an annual basis, August (36.3% in the previous month). Initial Unemployment Claimsweek ended August 27 (249,000 expected, 243,000 last week). Continuous claimsweek ended Aug. 20 (1.450 million expected, 1.415 million last week). Non-agricultural productivityfinal quarter (-7.5% expected, 7.5% last month); S&P Global US Composite PMIfinal August (51.3 expected, 51.3 last month); Construction Expensesmonth-on-month, July (-0.1% expected, -1.1% last month). ISM constructionAugust (52.0 expected, 52.8 last month) ISM rates paidMarch (60.0 last month). ISM New OrdersAugust (48.0 last month); ISM employmentAugust (49.9 last month); WARDS Total Vehicle SalesAugust (13.50 million expected, 13.35 million last month)

Friday: Non-agricultural payrollAugust (300,000 expected, 528,000 last month). Unemployment rateAugust (3.5% expected, 3.5% last month). Average Hourly Earningsmonth-on-month, August (0.4% expected, 0.5% last month). Average Hourly Earningsy/y, August (5.2% expected, 5.2% last month). Average weekly hours All employeesAugust (34.6 expected, 34.6 last month); Labor Force Participation RateAugust (62.2% expected, 62.1% last month). Underemployment rateAugust (6.7% last month); Factory ordersJuly (0.2% expected, 2.0% last month). Durable Goods Ordersfinal July (0.0% expected, 0.0% last month). Durable except for transportationfinal July (0.3% expected, 0.3% last month). Non-defense capital goods orders excluding aircraftfinal July (0.4% last month); Shipments of non-defense capital goods excluding aircraftfinal July (0.7% last month)

Earnings Calendar:

Monday: Catalyst (CTLT), Select Quote (SLQT)

Tuesday: Best Buy (BBY), horsepower (HPQ), Ambarella (AMBA), Baidu (BIDU), Big Lots (LARGE), Rubbery (CHWY) Conn’s (CONN), CrowdStrike (CRWD), Hewlett Packard Enterprise (HPE), Photonics (PLAB)

Wednesday: Mislead (PLAN), A cooper (COO), Designer Brands (DBI), Donaldson (DCI), Five Below (FIVE), MongoDB (MDB), Okta (EIGHT), NET Save (PSTG), Semtech (SMTC), Veeva Systems (VEEV), Vera Bradley (VRA)

Thursday: Lululemon Athletic (LULU), Broadcom (AVGO), Campbell Soup (CPB), Ciena (CIEN), Genesco (GCO), Hormel Foods (HRL), JOANN (JOANNA), Ollie’s Bargain Outlet (OLLI), SecureWorks (SCWX), Signet Jewelers (SIG), Sportsman’s Warehouse (SPWH), Toro (TTC), Weibo (WB)

Friday: No noteworthy reports are scheduled for publication.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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