US jobs data and Broadcom results face scrutiny amid September rate hike bets
Markets are bracing for critical US employment data and key semiconductor earnings that could dictate the Federal Reserve’s next interest rate move and the trajectory of the ongoing equity bull run.
Investors are turning their attention to the upcoming US employment report and second-quarter earnings from Broadcom as the summer lull ends. These events will serve as the next major test for a stock market rally that has pushed the S&P 500 up more than 12 percent this year.
The August jobs report, due September 4, is expected to show an addition of 58,000 jobs and an unemployment rate of 4.1 percent. This follows a surprising decline of 23,000 jobs in July, making the upcoming data critical for assessing labor market resilience.
Inflation remains well above the Federal Reserve’s 2 percent target, prompting investors to increase bets on a September rate hike following a speech by Fed Chair Kevin Warsh on Friday. Fed funds futures late Friday indicated a 57 percent probability of a rate increase at the next meeting.
“As we're starting to get closer to that September meeting, each data print is going to be under the microscope as it may inform what the Fed ultimately does,” said Michael Reynolds, vice president of investment strategy at Glenmede. A hot jobs report with sharp wage growth could further solidify expectations for tighter monetary policy, raising borrowing costs for companies and consumers.
Despite these macroeconomic headwinds, markets have remained relatively calm. The Cboe Volatility Index has hovered near its lowest point of the year, supported by strong corporate profit growth driven by massive spending on artificial intelligence infrastructure.
Attention will also focus on Wednesday’s earnings report from Broadcom, which holds a market value of approximately $1.7 trillion. The semiconductor giant’s results will be closely watched for forward guidance after rival Nvidia recently forecast a 70 percent jump in revenue for its next fiscal year.
“We're just wondering whether or not Broadcom offers the same type of visibility,” said Matt Stucky, chief portfolio manager for equities at Northwestern Mutual Wealth Management. Dell Technologies and Palo Alto Networks are also scheduled to report next week.
The broader earnings season has been robust, with S&P 500 second-quarter adjusted earnings on pace to climb 34.5 percent from a year earlier, according to LSEG IBES data. Reynolds noted this demonstrates “really robust core earnings power,” adding that sustained strength in the final reports would be “really constructive for what the rest of the year looks like.”
