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What happened: On Friday, September 4, U.S. stock futures were flat, with the S&P 500 futures unchanged at 7,671.1 points, while the Nasdaq 100 futures were little changed. However, during the day, the Dow Jones Industrial Average (DJIA) fell 0.67% to 53,325.23, the S&P 500 slipped 0.50% to 7,708.89, and the Nasdaq Composite traded 0.44% lower at 26,467.18. This decline was driven by a surprisingly strong August jobs report, which sparked bets on a Federal Reserve rate hike. The S&P 500 Equal-Weighted Index, which gives equal weight to all stocks, was up about 15% in 2026, outperforming the standard S&P 500's 12% gain.
Market impact: The strong jobs report fueled inflation concerns, leading investors to rotate out of expensive growth stocks and into value stocks. This shift impacted technology stocks, with the Nasdaq Composite, which is heavily weighted towards tech, leading the decline. Lululemon Athletica (LULU) plummeted 13.5% after reporting earnings, while Tesla (TSLA) sank 6.4%. Meanwhile, the Dow Jones Industrial Average, which has a higher exposure to value stocks, fared better, with not a single stock moving more than 2% in either direction.
What to watch next: Investors should closely monitor the upcoming Labor Day weekend, as markets are closed on Monday, which could lead to increased volatility on Tuesday. Additionally, the next Federal Reserve meeting on September 21-22 will be crucial, as markets await clarity on the central bank's monetary policy in light of the strong jobs report. Lastly, earnings season will kick into high gear in the coming weeks, with many major companies, including Apple (AAPL) and Amazon (AMZN), reporting results. These earnings reports could drive significant market movements.