NEWS
A Friday Close On The Lows

Bears took softening economic data as their opportunity to pounce, with the S&P 500 recording its worst week since March 2023 and the Nasdaq 100 having its worst since 2022. Shortly after the close, the White House accused Iran of sending weapons to Russia, and stocks continued to fall over fears of a weekend escalation overseas. 👀

Today's issue covers why the Fed is unlikely to cut 50 bps, big trouble at Big Lots, Roaring Kitty’s potential return to GameStop, two under-the-radar earnings breakouts, and a recap of the S&P 500’s quarterly reconstitution. 📰

Here’s the S&P 500 heatmap. 1 of 11 sectors closed green, with real estate (+0.00%) leading and technology (-2.59%) lagging.

And here are the closing prices: 

Most bullish/bearish symbols on Stocktwits at the close: 📈 $MCRB, $CLS, $VOR, $GWRE, $IOT 📉 $ZUMZ, $PRKR, $MBLY, $VTLE, $SCLX*

*If you’re a business and want to access this data via our API, email us.

EARNINGS
Not Hiring, But Not Firing Either… 🤔

This morning was the latest ‘most important jobs report’ in a series of ‘most important jobs reports ever,’ as investors and the Fed try to determine whether a 25 bp or 50 bp cut is coming on September 18th.

First, let’s discuss what happened and then try to interpret the action. 👇

Nonfarm payrolls rose 142,000 during August, up from 89,000 in July but below the 161,000 expected by analysts. Additionally, the July numbers were revised down by 25,000, and June was revised down by 61,000.

Average hourly earnings rose 0.40% MoM and 3.80% YoY, 10bps higher than expectations for both measures. Hours worked inched higher to 34.30. 🔺

The headline unemployment rate ticked down to 4.2% when rounded, but it barely budged when taken to two decimals, falling from 4.25% to 4.22%.

So, clearly, the labor market is continuing to cool, and the risks to the economy outweigh the risks of inflation re-accelerating. But is the economic risk enough to warrant the Fed cutting 50 bps instead of 25?

I shared today on Stocktwits what I believe is an important perspective being discussed by several Wall Street analysts including Callie Cox and Jeffrey Rosenberg. And that is what’s driving the unemployment rate. 🔍

Below is a quote from today’s jobs report, followed by my commentary.

Overall, it seems that many on Wall Street believe the Fed should cut 50 bp but will not because doing so could send a signal that the economy is at risk of a serious recession…even though the data says it’s only cooling. ⚠️

Clearly, the market has not gotten a good enough read on the Fed’s next move because we’re continuing to see pressure on risk assets heading into the Fed meeting. So we’ll have to wait and see.

A good place to leave this discussion is with a poll we’ve got up on Stocktwits right now asking if you’d rather own bonds (nearing a breakout) or Bitcoin (nearing a breakdown) for the next twelve months. 💸

Go check out the chart and leave your response. If the team likes your thesis enough, you could win a t-shirt. 😉

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