Weekly update: Record valuations, Fed rate cut optimism, weak jobs report

As September begins, financial markets and U.S. economic activity are being influenced by record-high equity valuations, growing optimism for potential Federal Reserve rate cuts, continued resilience in the consumer sector, and a weaker-than-expected August jobs report. Below are the key developments to keep in mind.

Stock Index Performance 

• The S&P 500 gained 0.33%.
• The Nasdaq 100 rose by 1.01%.
• The Dow Jones Industrial Average dipped 0.32%.

Labor Strain 

• The U.S. labor market lost momentum in August, adding only 22,000 jobs compared with forecasts of 75,000 — the slowest pace of growth since the pandemic. Revised figures also showed a net job loss in June, the first since 2020, and a downward adjustment to July’s gains.
• The unemployment rate rose to 4.3% in August, its highest level in nearly four years. The number of unemployed increased by 148,000 compared with July, highlighting growing signs of labor market weakness.
• Wage growth slowed to 3.7% year over year in August, the weakest pace since July 2024, while job openings fell to an 11-month low. For the first time since the pandemic, the number of unemployed surpassed available positions. 

Gold vs. Dollar 

• Gold increased over 3% last week and has surged 38% year-to-date, reaching record highs near $3,600 per ounce. This impressive performance positions 2025 as potentially gold's best year since 1979 — and far ahead of most major asset classes so far this year. 

• Gold’s performance has been supported by central bank purchases, particularly from China, as investors seek safer alternatives to dollar assets and portfolio diversification. Rising political tensions, concerns over Fed independence, and global macro uncertainty have also driven strong inflows. 

• The U.S. dollar fell 0.6% on September 5 to extend its period of weakness, with the U.S. Dollar Index near its lowest levels since June and down 3.6% over the past year. Expectations for Fed rate cuts and broad geopolitical trends are weighing on the currency. 

The Week Ahead 

• On September 10th, the Producer Price Index (PPI) will provide an early signal of inflation trends, with economists anticipating a 0.3% monthly increase. On the next day, the Consumer Price Index (CPI) is expected to show a 0.3% monthly gain and a 2.9% increase year over year. 

• Markets remain highly sensitive to potential policy signals ahead of the Fed’s upcoming meeting on September 17th. Expectations for a rate cut are building, driven by signs of a softening labor market and easing inflation.  

That’s all for this week’s update. In today’s fast-moving markets, it’s natural to feel the impact of shifting trends and headlines. Please know that I am always here to help you stay focused on your long-term goals. If you have any questions about your portfolio or overall financial plan, don’t hesitate to reach out.