Stocks Closed Mixed, All Eyes On This Morning's Employment Report _21484_565x377.jpg) Image: Bigstock Stocks closed mixed yesterday with the Dow and the S&P modestly lower while the Nasdaq eked out a small gain. All of the major indexes closed lower for the month, but well off their intramonth lows. By month's end the Dow was only down by -2.35%, the S&P by -1.77%, and the Nasdaq by -2.16%, well above their worst levels of -4.30%, -5.52%, and -8.25% respectively. The day's main reporting event was the Personal Consumption Expenditures (PCE) Index. This is the Fed's preferred inflation gauge. The headline number was up 0.2% m/m as expected, while the y/y rate was up 3.3%, in line with the consensus for the same, but up from last month's 3.0%. The core rate (ex-food & energy) was up 0.2% as well, also as expected, while the y/y rate was up 4.2%, which was in line with the consensus, but above last month's 4.1%. No surprises. But it did underscore the stickiness of inflation at these levels. It may be off last year's peak. But getting inflation back down to 2% is proving to be a challenge as the rate of decline has slowed (or in some cases, slightly reversed). In other news, yesterday's Challenger Job-Cut Report increased to 75,151 job cuts vs. last month's 23,697. Weekly Jobless Claims, however, fell by -4,000 to 228,000 vs. the consensus for an increase to 238,000. The smoother 4-week moving average was virtually unchanged at 237.50K vs. last month's 237.25K. And the Chicago PMI rose to 48.7 vs. last month's 42.8 and views for 44.6. Today we'll get Motor Vehicle Sales, the PMI Manufacturing report, the ISM Manufacturing Index, and Construction Spending. We'll also get the always important Employment Situation report. The consensus is calling for 170,000 new jobs to have been created in August (147K in the private sector and 23K in the public), while the unemployment rate is expected to stay the same at 3.5%. Inflation and jobs are two important inputs the Fed looks at in deciding monetary policy. We all want to see a robust jobs market. But it has been running hot, in spite of the Fed's historic rate hike cycle. In fact, it's been so strong, even in the face of rising interest rates, that Fed Chair, Jerome Powell had commented with seeming incredulity that rates have risen to 5% while the unemployment rate is still so low. A moderating jobs report -- not too hot, but not too cold, would be just right. But another overheated jobs report (especially if it was accompanied by a larger than expected increase in wages), would be another data point arguing for another rate hike. But if jobs come in roughly as expected (up a little more, down a little more, or as expected), that would be a notch for the pause camp. That report comes out at 8:30 AM ET. Note, the markets are closed on Monday for Labor Day. So today is the last trading day before the 3-day holiday weekend. So there could be some extra volatility. Either way, it should be a busy day. Best,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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