Wall Street may get a jumbo-sized Federal Reserve rate cut after another horrid U.S. jobs report. The U.S. economy added just 22,000 jobs in August . That’s below even a muted Dow Jones forecast of 75,000. Some of the revisions were problematic as well. The Bureau of Labor Statistics said June was revised down to a net loss of 13,000 jobs. July gains were upwardly revised by 6,000 to 79,000, though that’s still below the consensus estimate from back then. The market took the report in stride, however. S & P 500 futures held their gains , while contracts tied to the Dow Jones Industrial Average bounced from a brief pullback. That’s in part because the data more than solidified expectations for a quarter-point rate cut. It also puts a jumbo-sized half-point reduction back on the table, albeit slightly. The CME Group’s FedWatch tool shows there’s a 12% chance of a 50 basis point rate cut in September, up from zero on Thursday. One basis point equals 0.01%. “Overall, it was a disappointing release that will start the conversation about whether the FOMC should cut 50 bp on September 17,” Ian Lyngen, head of U.S. rates strategy at BMO, wrote after the 8:30 a.m. ET jobs report release. “We’re still in the 25 bp cut camp but will acknowledge that next week’s benchmark revisions and CPI could shift the market’s perception on the appropriateness of going a quarter-point.” The increase of bets on lower Fed rates sent Treasury yields sharply lower and gold soaring to fresh record highs. The benchmark 10-year Treasury note yield was last down 10 basis points at 4.076%. Gold futures spiked 1% higher to an all-time high of $3,644.90 per ounce. Take a look at what investors on Wall Street had to say about the jobs report and what it means for the market. Art Hogan, chief market strategist at B. Riley Wealth: “The jobs report, while weaker than expected, leaves the door wide open for the Fed to cut rates at the September 17th meeting. … The big question for markets is, what the new normal monthly increases in jobs is that will keep unemployment unchanged. Last year it was between 100,000 and 150,000. This year with limited emigration and retiring baby boomers it is likely closer to 50,000.” Saira Malik, head of equities and fixed income at Nuveen, during a “Squawk Box” interview: “This gives the Fed the greenlight to cut by 25 basis points and I think it’s going to bring 50 basis points of rate cuts on the table for this September FOMC meeting and that’s why markets are positive.” Joe Gaffoglio, CEO at Mutual of America Capital Management: “The weaker jobs report for August wasn’t unexpected considering the Bureau of Labor Statistics has revised the last few reports to reflect fewer job gains than initially reported. The labor market continues to show fatigue as businesses hold back on hiring amid uncertainty around the direction of inflation, tariffs and the strength of the underlying economy.” Jeff Schulze, head of economic and market strategy at ClearBridge Investments: “The August payrolls release did little to quell fears of a recessionary-esque labor backdrop with job creation remaining at stall speed. Nothing in today’s report changes the outlook for a September rate cut, with concerns over the labor market trumping the desire to wait for more clarity on tariff-induced inflation. This report is supportive of additional and faster rate cuts beyond September, which combined with next week’s QCEW revisions could influence the degree to which the FOMC lays the groundwork for additional rate cuts later this year.” Bret Kenwell, U.S. investment analyst at eToro: “Coming into Friday, confidence has grown to near certainty that the Fed will cut rates later this month — and today’s report adds even more weight to that scale. Inflation is moving in the wrong direction, but so is the labor market. In this scenario, the Fed has to address the larger of the two risks, which is the softening jobs market.” Lara Castleton, U.S. head of portfolio construction and strategy at Janus Henderson Investors: “The print clearly shows the labor market is cooling, but this isn’t a meltdown. Despite the weak headline, the labor market is still generating jobs, and 4.3% unemployment remains historically healthy. Equities are reacting positively, and bonds yields down as this softer print cements a Fed rate cut in September, with the door open for more easing through year-end.” — CNBC’s Yun Li, Michelle Fox and Alex Harring contributed reporting.
