This week we flipped the calendar to September, the worst month for stocks. Over the weekend the US and Iran exchanged fire for the first time since July. President Trump also posted AI-generated videos of Kharg Island being “blown to smithereens”. Last week the market awaited The 3 Amigos data releases. This week, it was just Fletch (the original) on the marquee, as Friday brought the monthly jobs report. As we note below it was a strong print and included upward revisions to prior months. Yields backed up (though only modestly) and the S&P drifted lower, even as oil was unchanged.

The S&P 500 was fractionally higher, firmly within the 7600-7800 range. The equal-weight fell 0.8% however, as mega caps outperformed (NYSE 100 +0.7%). Small caps hugged the unchanged line. Breadth was soft with 6 sectors lower and 2 near unchanged. Energy was the leader this week with crude gaining ~10%. Tech was next, with hardware strong but software sold off. Utilities was the only other sector meaningfully higher, despite the modest backup in rates. The cyclical Industrials, Materials and Consumer Discretionary and Real Estate lagged. Amazon's 3% decline pressured Discretionary. While note technically Discretionary, there were a few negative updates from food companies that weighed on consumer stocks as a whole.

Labor Day weekend started early with the biggest labor market report, monthly employment. The data came in very hot, at 162K jobs added, basically tripling the consensus. The treasury curve steepened as the 10y rose 7bp and the 2y was up 2bp. Brent crude rose 8% for the week as hostilities re-emerged in the Middle East.

Markets are closed on Monday for Labor Day. We’ll get the latest reads on inflation with CPI and PPI, framing the Fed rate decision the week after. The ECB will hold its rate decision meeting, where a hike is largely expected. Earnings will include Oracle, Adobe, Macys, Krogers and Jersey Mike’s, among others. The end of summer also brings a burst of broker conferences, so there will be a lot of management commentary to parse. College Football moves from Week Zero to Week One (with Rutgers season over already), and the one we’ve all been waiting for, the NFL regular season kicks off with a Super Bowl rematch as the Seahawks take on the Patriots. On a more somber note, Friday will be the 25th anniversary of September 11, a day we will never forget. Enjoy your long weekend.