The three major employment data sets all collapsed, so why didn't the market crash? Tomorrow's non-farm payroll report is going to be a big deal!
2025-09-04 21:02:37
Between 7:30 PM and 8:30 PM on Thursday (September 4th), the United States released three key employment data sets: Challenger layoffs, the ADP private sector employment report, and initial jobless claims. These figures, which serve as a precursor to Friday's non-farm payroll report, are attracting significant market attention. The data showed that Challenger layoffs surged to 86,000 in August, a significant increase from 62,100 in July; ADP private sector employment increased by only 54,000, below market expectations of 65,000; and initial jobless claims unexpectedly rose to 237,000, exceeding expectations of 230,000. Despite the generally weak data, market reaction was relatively restrained, with S&P 500 futures rising slightly by 0.1%. The US dollar index and US Treasury yields fluctuated slightly, but without significant volatility.
Interpretations from institutions and retail investors show that market expectations for the Federal Reserve's September rate cut have further increased, but investors remain cautious and await final guidance from Friday's non-farm payroll data.
After the release of the Challenger layoffs data, the US dollar index briefly fell about 3 points, reflecting market concerns about higher-than-expected layoffs, but subsequently stabilized. The ADP employment data, released at 8:15 PM, showed that the private sector added 54,000 jobs in August, below the expected 65,000, and the July figure was revised upward to 106,000. Following the release of the data, the US dollar index fell further by 6 points to 98.3. Spot gold briefly rose $4, reaching a high of $3,552.16 per ounce, but quickly retreated to $3,546.20 per ounce. Initial jobless claims data, released at 8:30 PM, further exacerbated market expectations of a slowing labor market. Initial claims rose to 237,000, exceeding the expected 230,000, while continuing claims fell slightly to 1.94 million. The US Treasury market reacted mildly, with the 10-year Treasury yield narrowing its decline to 4.192%, recovering from its intraday low.
Overall market volatility was limited, with S&P 500 futures edging up just 0.1%. The Dow Jones Industrial Average dipped slightly due to weak earnings reports from some tech stocks. In contrast, gold prices briefly surged after the data release before retreating, suggesting a relatively muted immediate market reaction. This restrained reaction may be related to the approaching non-farm payrolls data on Friday, with investors tending to view today's data as a precursor rather than a definitive signal.
Judging by the data, the labor market is showing signs of slowing. Challenger layoffs hit an August high since 2020, and ADP employment data has fallen short of expectations for several consecutive months. The rise in initial unemployment claims further confirms this trend. Reputable institutions have pointed out that July's job vacancy data already showed that the number of unemployed people exceeded job openings. Combined with today's data, market expectations for a September Federal Reserve rate cut have significantly increased. According to statistics, the probability of a 25 basis point rate cut at the Federal Reserve's meeting on September 17 has risen to 98%, a significant increase from 87% a week ago. The probability of three rate cuts this year has also climbed to 43.5%.
Institutional and retail investors' views indicate subtle shifts in market sentiment before and after the data release. Prior to the release, some institutions projected ADP job creation of 68,000 and initial jobless claims around 230,000, reflecting expectations of a modest slowdown in the labor market. Among retail investors, some believe the clear expectation of a rate cut could drive gains in safe-haven assets like gold, but remain wary of a short-term correction in US stocks. After the data release, some traders noted that initial jobless claims, at 237,000, were higher than expected, but still considered it a bullish signal, potentially suggesting that the market's reaction to the data's surprise was diluted by anticipation of the non-farm payroll figures.
However, the market's interpretation of the weakening labor market is not unanimous. Some analysts believe that the ADP data has limited correlation with the official non-farm payroll data, and that the ADP data has repeatedly failed to accurately predict the non-farm payroll performance in the past. For example, in July, the ADP added 104,000 jobs, while the non-farm payrolls only added 83,000. Therefore, some investors believe that today's weak data may be corrected by Friday's non-farm payroll data, resulting in cautious market sentiment and low volatility.
Judging from market sentiment, today's data triggered a mild risk aversion. The US dollar index dipped briefly following the release of the ADP and initial jobless claims data, but remained below 98, indicating that market confidence in the greenback remained intact. Gold's brief surge reflected a temporary surge in safe-haven demand, but failed to sustainably break through $3,550/oz, suggesting that the market's assessment of risk remains conservative. The modest decline in US Treasury yields also suggests investors are concerned about the economic outlook, though not at panic levels.
External factors are also influencing market sentiment. A report from a prominent institution noted that Trump's tariff rhetoric and tightening immigration policies have impacted employment in the construction and restaurant sectors, potentially contributing to the weak employment data. Furthermore, the Federal Reserve's "Beige Book" report noted that businesses are cautious about hiring due to weak demand and uncertainty, further exacerbating market concerns about an economic slowdown. Some traders suggested that the deteriorating financial situation of ordinary Americans could prompt further government easing, raising expectations for interest rate cuts, but did not directly address the impact of today's data.
Despite this, the market's restrained reaction stems from the impending release of non-farm payroll data. Historically, non-farm payroll data has a far greater impact on the market than ADP and initial jobless claims data. Market expectations for August non-farm payroll growth are only 75,000, with the unemployment rate potentially rising to 4.3%. This suggests the market has already partially priced in expectations of a slowing labor market, and the negative impact of today's data has been somewhat absorbed.
Looking ahead, Friday's non-farm payroll report will be a key market focus. While current data suggests a slowing labor market, market expectations for interest rate cuts are nearing saturation. The 98% probability of a 25 basis point cut in September suggests growing confidence in the Fed's easing policy. However, Fed Chairman Powell recently stated that inflationary pressures persist and the pace of rate cuts may be limited. If the non-farm payroll data falls significantly short of expectations, the likelihood of a 50 basis point rate cut could increase, further pressure on the US dollar index, and potentially benefit gold and US Treasury prices.
In the short term, market volatility is likely to remain low unless the non-farm payroll data reveals extreme results. The S&P 500 has risen 9.6% year-to-date, nearing its all-time high, demonstrating strong resilience. However, some retail investors believe that high valuations in US stocks pose risks, and that the "exhaustion of positive news" after the rate cut could trigger a correction. In the long term, the continued slowdown in the labor market may prompt the Federal Reserve to accelerate the pace of rate cuts, but inflation data will also be crucial. If inflation pressures do not significantly ease, the Fed is likely to maintain a cautious stance, potentially leading to greater market uncertainty.
In summary, the September 4th employment data provided the market with a signal of a slowing labor market, but the restrained reaction suggests that investors are awaiting final confirmation from the non-farm payroll data. While expectations of a rate cut have increased, market sentiment remains constrained by multiple factors, and a cautiously optimistic tone is likely to persist in the short term.
Interpretations from institutions and retail investors show that market expectations for the Federal Reserve's September rate cut have further increased, but investors remain cautious and await final guidance from Friday's non-farm payroll data.
Market real-time quotes: Limited volatility, cautious sentiment
After the release of the Challenger layoffs data, the US dollar index briefly fell about 3 points, reflecting market concerns about higher-than-expected layoffs, but subsequently stabilized. The ADP employment data, released at 8:15 PM, showed that the private sector added 54,000 jobs in August, below the expected 65,000, and the July figure was revised upward to 106,000. Following the release of the data, the US dollar index fell further by 6 points to 98.3. Spot gold briefly rose $4, reaching a high of $3,552.16 per ounce, but quickly retreated to $3,546.20 per ounce. Initial jobless claims data, released at 8:30 PM, further exacerbated market expectations of a slowing labor market. Initial claims rose to 237,000, exceeding the expected 230,000, while continuing claims fell slightly to 1.94 million. The US Treasury market reacted mildly, with the 10-year Treasury yield narrowing its decline to 4.192%, recovering from its intraday low.
Overall market volatility was limited, with S&P 500 futures edging up just 0.1%. The Dow Jones Industrial Average dipped slightly due to weak earnings reports from some tech stocks. In contrast, gold prices briefly surged after the data release before retreating, suggesting a relatively muted immediate market reaction. This restrained reaction may be related to the approaching non-farm payrolls data on Friday, with investors tending to view today's data as a precursor rather than a definitive signal.
Fed rate cut expectations: Labor market weakness increases probability of rate cut
Judging by the data, the labor market is showing signs of slowing. Challenger layoffs hit an August high since 2020, and ADP employment data has fallen short of expectations for several consecutive months. The rise in initial unemployment claims further confirms this trend. Reputable institutions have pointed out that July's job vacancy data already showed that the number of unemployed people exceeded job openings. Combined with today's data, market expectations for a September Federal Reserve rate cut have significantly increased. According to statistics, the probability of a 25 basis point rate cut at the Federal Reserve's meeting on September 17 has risen to 98%, a significant increase from 87% a week ago. The probability of three rate cuts this year has also climbed to 43.5%.
Institutional and retail investors' views indicate subtle shifts in market sentiment before and after the data release. Prior to the release, some institutions projected ADP job creation of 68,000 and initial jobless claims around 230,000, reflecting expectations of a modest slowdown in the labor market. Among retail investors, some believe the clear expectation of a rate cut could drive gains in safe-haven assets like gold, but remain wary of a short-term correction in US stocks. After the data release, some traders noted that initial jobless claims, at 237,000, were higher than expected, but still considered it a bullish signal, potentially suggesting that the market's reaction to the data's surprise was diluted by anticipation of the non-farm payroll figures.
However, the market's interpretation of the weakening labor market is not unanimous. Some analysts believe that the ADP data has limited correlation with the official non-farm payroll data, and that the ADP data has repeatedly failed to accurately predict the non-farm payroll performance in the past. For example, in July, the ADP added 104,000 jobs, while the non-farm payrolls only added 83,000. Therefore, some investors believe that today's weak data may be corrected by Friday's non-farm payroll data, resulting in cautious market sentiment and low volatility.
Market sentiment changes: risk aversion is rising but limited
Judging from market sentiment, today's data triggered a mild risk aversion. The US dollar index dipped briefly following the release of the ADP and initial jobless claims data, but remained below 98, indicating that market confidence in the greenback remained intact. Gold's brief surge reflected a temporary surge in safe-haven demand, but failed to sustainably break through $3,550/oz, suggesting that the market's assessment of risk remains conservative. The modest decline in US Treasury yields also suggests investors are concerned about the economic outlook, though not at panic levels.
External factors are also influencing market sentiment. A report from a prominent institution noted that Trump's tariff rhetoric and tightening immigration policies have impacted employment in the construction and restaurant sectors, potentially contributing to the weak employment data. Furthermore, the Federal Reserve's "Beige Book" report noted that businesses are cautious about hiring due to weak demand and uncertainty, further exacerbating market concerns about an economic slowdown. Some traders suggested that the deteriorating financial situation of ordinary Americans could prompt further government easing, raising expectations for interest rate cuts, but did not directly address the impact of today's data.
Despite this, the market's restrained reaction stems from the impending release of non-farm payroll data. Historically, non-farm payroll data has a far greater impact on the market than ADP and initial jobless claims data. Market expectations for August non-farm payroll growth are only 75,000, with the unemployment rate potentially rising to 4.3%. This suggests the market has already partially priced in expectations of a slowing labor market, and the negative impact of today's data has been somewhat absorbed.
Outlook for future trends: Non-farm payroll data is key, and the path of interest rate cuts remains unclear
Looking ahead, Friday's non-farm payroll report will be a key market focus. While current data suggests a slowing labor market, market expectations for interest rate cuts are nearing saturation. The 98% probability of a 25 basis point cut in September suggests growing confidence in the Fed's easing policy. However, Fed Chairman Powell recently stated that inflationary pressures persist and the pace of rate cuts may be limited. If the non-farm payroll data falls significantly short of expectations, the likelihood of a 50 basis point rate cut could increase, further pressure on the US dollar index, and potentially benefit gold and US Treasury prices.
In the short term, market volatility is likely to remain low unless the non-farm payroll data reveals extreme results. The S&P 500 has risen 9.6% year-to-date, nearing its all-time high, demonstrating strong resilience. However, some retail investors believe that high valuations in US stocks pose risks, and that the "exhaustion of positive news" after the rate cut could trigger a correction. In the long term, the continued slowdown in the labor market may prompt the Federal Reserve to accelerate the pace of rate cuts, but inflation data will also be crucial. If inflation pressures do not significantly ease, the Fed is likely to maintain a cautious stance, potentially leading to greater market uncertainty.
In summary, the September 4th employment data provided the market with a signal of a slowing labor market, but the restrained reaction suggests that investors are awaiting final confirmation from the non-farm payroll data. While expectations of a rate cut have increased, market sentiment remains constrained by multiple factors, and a cautiously optimistic tone is likely to persist in the short term.
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