What Are the Key Insights from This Week’s Market Update?
- Surge in August Payrolls: Non-farm payrolls blew past expectations with 162,000 new jobs added, driving global bond yields to multi-month highs and increasing the likelihood of a September interest rate hike.
- Apple’s Upcoming Keynote: Anticipation builds ahead of Apple’s event under new CEO John Ternus, featuring rumors of a book-style foldable phone entering the market.
- Tesla’s Cybercab Launch: Tesla deployed its pedal-less Cybercab in Austin, but safety investigations by regulators and a long path to autonomous profitability weighed on shares.
Why Did Bond Yields Surge Despite Flat Equity Markets?
The four major indexes look to finish the week relatively flat, with the health care and materials sectors leading the way. The major news this week was the incredible August jobs report, which blew past expectations while the unemployment rate remained steady. Earlier in the week, the global bond market experienced a large sell-off, increasing yields to 19-month highs. The U.S. 30-year Treasury yield rose to above 5.3%. Strong tech earnings continued this week, with cloud data platform Snowflake and Hewlett Packard both beating profit and sales estimates.
What Does the Surprising August Jobs Report Mean for Interest Rates?
In economic news, weekly jobless claims came in at 206,000, slightly higher than the projection of 205,000. The most important economic data came in on Friday morning, when the US labor market reported non-farm payroll jobs for August at 162,000, beating estimates of 53,000 to 65,000. The jobs report was also revised upwards for June and July. The sectors that reported the largest growth were leisure and hospitality, with 62,000 new jobs, and restaurants, with 59,000 new jobs. The unemployment rate remained steady at 4.1%, down from the recent peak of 4.6% in November of last year. With this new data, the likelihood of an interest rate hike later in September is higher.
What Is Driving Buzz Ahead of Apple’s Upcoming Product Launch?
In corporate news, Apple made headlines this week ahead of its “Surprise and Shine” keynote next Tuesday. Specifically, the buzz is surrounding what is rumored to be the announcement of its next innovative product: a foldable phone. Although Apple is not the first to the party – the Samsung Galaxy Z is the first flip phone – it has a reputation for arriving later but dominating its market. The flip phone is a well-chosen design that opens sideways like a book, with a 7.8-inch horizontal screen that creates an iPad-like experience. In addition to this product, the upcoming event will be a historic moment for the company, as it’s the first product launch led by Apple’s new CEO, John Ternus.
What Are the Hurdles Facing Tesla’s New Cybercab Robotaxi?
In closing, we turn our attention to the company that always finds a way to remain in the headline news. Tesla released its long-awaited robotaxi, the Cybercab, onto the streets this week. The Cybercab is a golden-colored two-seat robotaxi with butterfly doors, and the most intriguing feature is that it has no steering wheel or pedals. Tesla CEO Elon Musk has made it no secret that he predicts Cybercabs will be the future of transportation and Tesla’s highest-volume vehicle. For now, Tesla has deployed only 45 cabs, and they are available only in a limited area in Austin, Texas. There is also a long path to profitability for robotaxis, as Google’s robotaxi service, Waymo, has been on the road since 2009 and has yet to be profitable. Another short-term hurdle for the new Cybercab is the investigation launched yesterday by the National Highway Traffic Safety Administration. The investigation is to see whether Tesla complies with U.S. safety standards. As a result, Tesla shares have dipped about 6% on the day.
Ryan Motsinger
Licensed Investment Advisor Representative Research & Trading Specialist | Harvest Financial Advisors, LLC |513.779.3030 | 800.361.0329