Stock Market Faces Inflation Test as Oil Prices Surge and Jobs Data Beats Forecasts

TLDR

• August jobs report showed 162,000 jobs created, far above economist expectations, but stocks still fell on rate hike fears
• S&P 500 dipped 0.5% Friday, ending the week flat; Dow fell 0.7%
• Odds of a Fed rate hike on September 16 rose to 58-60% after the payrolls report
• Brent crude rose nearly 1.5% to $97.60 a barrel, up 35% since late February, with diesel at record highs
• Lululemon Athletica shares dropped 18% after same-store sales fell 9% in Q2

The U.S. economy added 162,000 jobs in August, roughly three times what economists expected. The unemployment rate held steady at 4.1%, and the labor force participation rate ticked up to 61.6%, its first gain in 11 months.

The underemployment rate fell to 7.7%, the lowest since June 2025.

Despite the strong data, stocks did not celebrate. The S&P 500 slipped 0.5% on Friday, the Dow Jones Industrial Average fell 0.7%, and the Nasdaq Composite ended the week slightly higher. The S&P 500 finished the week flat overall.

The drop frustrated President Donald Trump, who posted on Truth Social calling the reaction “crazy” given what he described as great economic numbers.

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