US Stocks End Volatile Week Flat as Strong Jobs Revive Fed Hike Fears

US stocks finished a volatile week roughly unchanged after stronger-than-expected August jobs data pushed investors to reconsider the chance of another Fed rate hike.

Jobs Data Changes the Fed Outlook

The US economy added 162,000 jobs in August, nearly three times expectations. Markets now see around a 60% chance of a September 16 Fed rate hike, up from roughly 43% a week earlier.

The 2-year Treasury yield jumped as much as 8 basis points after the report, while the 10-year yield touched 4.818%, its highest level since November 2023.

Higher yields are becoming an important pressure point for stocks because they make borrowing more expensive and reduce the relative appeal of equities.

Broadcom Strong, but Expectations Were Even Higher

Broadcom reported another big jump in AI demand, with AI semiconductor revenue rising 221% year over year to $16.7 billion.

The company expects growth of another 236% next quarter, but shares still fell 2.7% as the outlook failed to meet already very high expectations.

Meanwhile, Lululemon plunged 17% to its lowest level since 2018 after cutting its full-year sales forecast and reporting a 4% decline in revenue.

The weakness added to concerns that US consumers are becoming more cautious, especially with expensive discretionary purchases.

Oil Surges as Iran Risks Return

Oil was one of the biggest movers of the week.

Brent crude rose more than 7%, while WTI jumped 9.4%, marking their strongest weekly gains since July as renewed US-Iran tensions around the Strait of Hormuz increased fears of supply disruptions.

The Japanese yen also gained around 2.5%, its second-largest weekly rise since February, as expectations for another Bank of Japan rate hike increased.

Weekly Market Performance

S&P 500: +0.1%
Nasdaq: +0.4%
Russell 2000: +0.1%
Dow Jones: -0.3%
Bitcoin: +1.7%
US Dollar Index: -0.5%
Gold: -1.2%
Silver: -1.4%
WTI crude: +9.4%

Investor takeaway: Stocks managed to finish the week nearly flat, but risks are building underneath the surface. Higher Treasury yields, renewed Fed hike expectations and rising oil prices could keep volatility elevated, while earnings from Broadcom and Lululemon show investors are becoming more selective.