August Jobs Report Sparks Rate Hike Speculation as Inflation Fears Persist

The US jobs report for August showed a stronger-than-expected hiring rate, which could give the Federal Reserve more leeway to raise interest rates to combat inflation. Employers added 162,000 jobs last month, exceeding forecasts of 65,000. The surprise increase in hiring could lead to a rate hike at the Fed's upcoming meeting on September 16.

The S&P 500 fell 0.5%, while the Dow Jones Industrial Average dropped 282 points, or 0.5%. However, gains in technology stocks helped limit declines in other sectors. Nvidia rose 0.7%, Advanced Micro Devices added 3.4%, Sandisk jumped 10.3%, and Micron Technology gained 4.1%.

Lululemon Athletica sank 17.3% after reporting quarterly revenue that fell short of analysts' estimates and lowering its fiscal full-year outlook again. U.S. government bond yields mostly rose, with the yield on the 10-year Treasury increasing to 4.78% from 4.77%. The Labor Department reported revisions to June and July payrolls, adding 55,000 jobs.

Wall Street expects the central bank to raise interest rates before the year ends to cool inflation, which has been running hot due to rising oil prices amid the U.S. war with Iran. The stronger jobs market could make matters more complicated for the Fed, which must balance supporting job growth with fighting inflation.