S&P at new highs ahead of August jobs report

General market commentary

US equities finished broadly higher on Thursday with the S&P 500 advancing about 0.8% to a new record close at 6,502.08, the Nasdaq up roughly 1% and the Dow Jones Industrial Average adding close to 350 points or 0.8%. Consumer discretionary and communication services led the way while utilities underperformed as the only sector in the red. U.S. Treasury yields fell with the 10-year slipping to 4.16% underscoring caution ahead of today’s August labour market report. The dollar strengthened while oil prices eased before this weekend’s OPEC meeting where producers may consider raising supply. European equities also gained ground despite retail sales in the eurozone contracting by 0.5% in July, a smaller decline than expected.

Several high-profile shares provided additional momentum. T. Rowe Price rose nearly 6% after news of a $1 billion Goldman Sachs investment, lifting Goldman itself by more than 2.5%. Tech and consumer names were buoyant with Amazon up over 4% and Netflix rising about 2.6% as both broke through resistance levels. Broadcom gained on strong earnings and a sizeable AI chip order. Labour market data remained a key focus with the ADP survey showing just 54,000 private-sector jobs added in August while weekly jobless claims rose slightly. Markets now look to today’s non-farm payrolls report where modest job growth of around 80,000 and unemployment steady at 4.2% are expected, a reading that could reinforce hopes of a rate cut at the Fed’s September meeting.

Latest market and economic update

Most Asian equities rose on Friday, lifted by Wall Street’s record highs and anticipation of U.S. payrolls data. Japan’s Nikkei led after a new U.S. trade deal cut tariffs and strong household spending boosted sentiment. Chinese shares steadied but faced weekly losses, while Hong Kong, Australia and Singapore gained and South Korea was flat.

US equity futures inched higher overnight as investors awaited the August jobs report, seen as pivotal for confirming expectations of a September Fed rate cut. In after-hours trading, Broadcom surged 4% following stronger-than-expected earnings, upbeat guidance, and $10 billion in new orders for custom artificial intelligence chips, boosting sentiment in the tech sector.

European equities closed higher on Thursday, with the STOXX 50 and STOXX 600 rising 0.4% and 0.6% as long-dated yields fell, easing concerns over credit costs. Travel shares lagged, led by Jet2 down 12.5% after cutting its winter capacity, while Ryanair, easyJet and TUI also fell. Technology shares outperformed, with SAP up 0.9% and ASML 3.5% higher.

The dollar index fell to 98.1 on Friday, erasing gains from the previous session, as weak jobs data, declining payrolls and rising claims reinforced expectations of a September Federal Reserve rate cut. Investors focused on labour market cooling, prompting dollar weakness against major currencies, including the euro at 1.1668, with steepest losses versus the New Zealand and Australian dollars.

Oil prices fell this morning in Asia, with Brent at $66.83 and WTI at $62.88, amid uncertainty over potential OPEC+ output increases and an unexpected rise in U.S. inventories. Crude was set for weekly losses as concerns grew over cooling fuel demand, rising supplies and subdued consumption, with markets eyeing the August U.S. jobs report for economic cues.

U.S. President Trump signed an order implementing lower tariffs on Japanese automobiles, cutting the rate from 27.5% to 15% and providing clarity on the July trade deal. The agreement includes $550 billion in Japanese investment in U.S. projects, increased agricultural purchases and defence spending, boosting trade certainty for automakers amid political pressure on Prime Minister Ishiba.

New York Fed President John Williams said gradual interest rate cuts are likely if unemployment rises modestly and inflation softens next year. Current policy is “modestly restrictive” but may shift toward neutral over time. He noted tariffs lift inflation by 1–1.5%, growth is slowing, and the Fed may cut rates at the September meeting depending on the August jobs report.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Broadcom expects AI revenue to "improve significantly" in fiscal 2026 after securing over $10 billion in AI infrastructure orders from a new customer. CEO Hock Tan, committed to leading for five more years, highlighted strong growth in custom AI chips for cloud giants, while non-AI semiconductor units showed weakness. Q3 revenue of $15.95 billion exceeded estimates.

OpenAI plans to begin manufacturing its own AI chip from 2026 in partnership with Broadcom, aiming to meet rising computing demands and reduce reliance on Nvidia. The chip will be used internally, with Broadcom receiving $10 billion in orders. The move aligns OpenAI with other AI leaders designing specialised chips for their workloads.

Lululemon Athletica cut its annual profit and sales forecasts for the second quarter in a row, citing weak U.S. demand, product issues and higher tariffs. Shares fell around 15% after hours. While international sales grew 15%, U.S. comparable sales fell 1%, with CEO Calvin McDonald acknowledging mismanaged product life cycles and rising competition in athleisure.

Goldman Sachs will invest up to $1 billion in T. Rowe Price, acquiring around 3.5% of the asset manager and becoming its fifth-largest shareholder. The partnership aims to offer private market products to retail investors, particularly retirement-focused clients, boosting T. Rowe amid asset outflows. Shares rose about 6% following the announcement.

Sanofi fell over 9%, wiping nearly $13 billion off its market value, after Phase III data for its experimental eczema drug amlitelimab disappointed. While the drug met main trial goals, it proved weaker than Sanofi’s best-selling Dupixent, raising concerns over pipeline strength and the challenge of replacing Dupixent after its 2031 patent expiry.

Amazon shares rose over 4% following a SemiAnalysis report predicting an “AWS AI Resurgence.” While previously seen as facing a “cloud crisis,” AWS—responsible for around 60% of Amazon’s profits—is poised for over 20% growth by late 2025, driven by its partnership with Anthropic and aggressive expansion of datacentre capacity to support AI workloads.

Apple is expected to raise iPhone prices for the first time in seven years with the iPhone 17 launch on September 9, potentially boosting earnings. The iPhone 17 Air and Pro models see modest price increases, driving average selling prices 5% higher in fiscal 2026. Demand is unlikely to be significantly affected.

Luxury carmaker Porsche will be removed from Germany’s blue-chip DAX index on September 22 after a prolonged share price decline, partly due to U.S. tariffs affecting the European auto sector. STOXX Ltd announced that online listings firm Scout24 will replace Porsche as part of a scheduled index rebalancing.

Moffett Nathanson upgraded Apple to Neutral from Sell, citing the fading of key risks including Huawei’s resurgence, tariff concerns, and a U.S. court ruling on Google payments. While the shares remain expensive at over 30 times projected 2026 earnings and faces AI development challenges, the worst-case scenarios are largely resolved, justifying a $225 price target.

Truist analysts reiterated a Buy rating on AMD, citing growing momentum in data centre and AI markets as customers increasingly view the company as a key partner. The MI355 GPU, strong demand for AI-adjacent servers, and improvements in ROCm software support growth. AMD’s MI355 margins exceed prior GPUs, while near-term volume and gross profit are expected to rise.

DA Davidson downgraded Duolingo to Neutral from Buy and cut its price target to $300, citing slowing user growth. Active users fell 0.4% from mid-July to late August, below historical trends, while subscription growth lagged expectations. Analyst concerns also noted increased reliance on paid marketing and the departure of key social media executive Zaria Parvez.

UBS upgraded Airbus to Buy from Neutral, raising its 12-month price target to €220, citing stronger demand visibility and easing supply chain pressures. The bank forecasts 945 deliveries in 2026, above consensus, and expects long-term A320neo production to peak at 85 units per month by 2031.

Bernstein upgraded RWE to Outperform, raising its price target to €41, citing disciplined capital allocation, reduced capex, higher renewable investment hurdles, and a €1.5 billion buyback programme. Near-term earnings face modest pressure, but growth resumes by 2027, supported by UK offshore wind and German gas project opportunities.

Upcoming data and events

Markets await key employment data in the U.S. today, including nonfarm payrolls, the unemployment rate, and average hourly earnings. In Europe, Germany releases factory orders, while France reports its current account and trade balance.

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