This year, the unease is amplified. The return from Labor Day, a holiday meant to honor work, though increasingly spent trying to avoid email, found investors staring down a week of economic reports. The centerpiece is Friday's nonfarm payrolls, the perennial measure of whether America is hiring with gusto or with reluctance. Preceding that will be private payroll tallies and job openings figures, each a kind of mood ring for the labor market. What they reveal will do much to determine the Fed's course later this month.
Markets, always eager to second-guess the central bank, are currently wagering heavily on a quarter-point rate cut. Ninety percent odds, say the futures markets. This confidence has its roots: July's jobs report came in weak, and Jerome Powell, in his annual pilgrimage to Jackson Hole, nodded to the growing risks in employment.
Still, optimism about cheaper money collides with other, less cheerful realities. Bond yields on the ten-year and thirty-year Treasuries are at their highest levels in over a month, exerting pressure on equities. The CBOE's volatility index has crept upward too, suggesting that markets are bracing for turbulence.
The summer earnings parade brought mixed results, particularly among the darlings of artificial intelligence. After months of breathless commentary about algorithms transforming the economy, some quarterly updates failed to dazzle. The trouble with revolutions, technological or otherwise, is that they must eventually justify their expense. Investors, it turns out, still want to see profits.
Meanwhile, some retailers - those barometers of household mood - will report this week. Macy's and Dollar Tree are on the docket, offering a glimpse into whether the American consumer, so often described as "resilient," remains willing to spend under the weight of tariffs and higher borrowing costs. If the consumer falters, the entire edifice of growth looks shakier.
On the first trading day after Labor Day, Dow E-minis fell by 0.8%, S&P E-minis by 1%, and Nasdaq 100 E-minis by 1.3%. September will reveal whether that mood hardens into something darker. For now, Wall Street seems caught between the promise of lower rates and the dread of what might have prompted them in the first place.
Not all was gloom on Tuesday morning. Gold miners climbed as bullion touched record highs. A century ago, prospectors rushed into the hills with picks and mules. Today, their corporate descendants deliver gains through exchange-listed shares. Newmont and Royal Gold are up 2%.
To round off this morning's newsletter, I'm going to quote some interesting figures from a list compiled by Bank of America a few days ago. The 28 August edition focuses quite a bit on debt. For example, I learn that Italy's last budget surplus dates back to 1905, which means that no one alive today has ever experienced one. For France, we have to go back to 1974, and to 2001 for the United Kingdom and the United States. The US, which last had a trade surplus in 1975, now has a public debt of $37 trillion, which is more than the combined annual GDP of China, Japan, Germany and India.
Today's session will therefore be marked by Wall Street's return to business and the publication of three major statistics. European inflation for August, as well as the August manufacturing PMI and ISM indices in the United States, which are expected to improve compared to July. In Asia-Pacific, the Nikkei 225 was flat after already losing ground yesterday. Mainland China and Hong Kong are reversing course after yesterday's gains. India and South Korea were up 0.4% and 0.8% respectively during the session.
Australia ended down 0.3% despite gains in its financial and mining stocks. European leading indicators are bearish.
Today's economic highlights:
Today's agenda includes: the Eurozone Consumer Price Index; in the United States, the S&P Global US Manufacturing PMI, construction spending, and the ISM Manufacturing Index. See the full calendar here.
- Dollar index: 98,425
- Gold: $3,485
- Crude Oil (BRENT): $69.21 (WTI) $65.70
- United States 10 years: 4.29%
- BITCOIN: $109,385
In corporate news:
- Elliott Management disclosed a $4 billion stake in PepsiCo, launching an activist campaign to improve the company’s performance and calling for an operational review and structural changes.
- Klarna said on Tuesday it was aiming for a U.S. listing valuing the fintech at up to $14 billion
- Kraft Heinz will split into two publicly traded companies - Global Taste Elevation Co. and North American Grocery Co.- to simplify operations and accelerate growth, with the deal expected to close in H2 2026.
- Baker Hughes was selected by Fervo Energy to provide geothermal power generation equipment, including turboexpanders and generators, for innovative new power plants.
- Merck announced that its cholesterol-lowering oral drug, Enlicotide Decanoate, met all key endpoints in a late-stage trial for hypercholesterolemia, showing strong efficacy and safety.
- United Therapeutics reported that its drug Tyvaso showed positive results in a pivotal study for idiopathic pulmonary fibrosis, paving the way for a label expansion.
- Cigna’s unit Evernorth Health is investing $3.5 billion in specialty pharmacy firm Shields Health, enhancing its presence in a fast-growing segment.
- Olema Oncology and Pfizer signed a new clinical trial agreement to test a combination treatment for ER+/HER2- metastatic breast cancer, with Olema leading the study.
- Plains All American Pipeline will acquire a 55% stake in EPIC Crude Holdings from Diamondback Energy and Kinetik Holdings for $1.57 billion to expand its oil pipeline network.
- Citigroup has reportedly been chosen to lead Airtel Africa’s IPO of its mobile money unit, which could be valued at over $4 billion and is expected to list in H1 2026.
- Dow received an additional $540 million investment from Macquarie Asset Management, increasing Macquarie's stake in Diamond Infrastructure Solutions to 49% while Dow retains control.
- Tesla faces declining sales in European markets for the eighth consecutive month due to increased competition and backlash against Elon Musk's politics, despite sales growth in Portugal and initial deliveries of Model Y L in China.
- Amazon plans to invest NZ$7.5 billion (approximately $4.4 billion) in building data centers in New Zealand.
Analyst Recommendations:
- Acuity Inc.: Wells Fargo upgrades to overweight from equalweight and raises the target price from USD 320 to USD 380.
- Ally Financial Inc.: Wells Fargo upgrades to market weight from underweight and raises the target price from USD 37 to USD 45.
- Block, Inc.: BNP Paribas Exane downgrades to neutral from outperform with a price target raised from USD 81 to USD 86.
- Chemed Corporation: Jefferies upgrades to buy from hold and raises the target price from USD 490 to USD 550.
- Elf Beauty: Deutsche Bank downgrades to hold from buy and raises the target price from USD 121 to USD 128.
- Fortinet, Inc.: Morgan Stanley downgrades to underweight from equalwt and reduces the target price from USD 78 to USD 67.
- Hubbell Incorporated: Wells Fargo upgrades to overweight from equalweight and raises the target price from USD 445 to USD 490.
- Performance Food Group Company: Piper Sandler & Co upgrades to overweight from neutral with a price target raised from USD 90 to USD 114.
- Zscaler, Inc.: Morgan Stanley upgrades to overweight from equalwt with a price target raised from USD 280 to USD 320.
- Affirm Holdings, Inc.: Mizuho Securities maintains its outperform rating and raises the target price from USD 70 to USD 108.
- Celsius Holdings, Inc.: B Riley Securities Inc. maintains its buy recommendation and raises the target price from USD 56 to USD 75.
- Fortive Corporation: Morgan Stanley downgrades to market weight from overweight and reduces the target price from USD 90 to USD 50.
- Lucid Group, Inc.: Morgan Stanley maintains its equal weight recommendation and raises the target price from USD 3 to USD 30.
- Nvidia Corporation: SPDB International Holdings Ltd maintains its buy recommendation and raises the target price from USD 143 to USD 203.
